There are few commercial motor buyers that would not be aware of issues arising out of depreciation values of vehicles. Our experience is that there is also broad understanding that most motor insurers will only settle a total loss claim up to a maximum of the market value of the vehicle. In some cases, this may be significantly lower than the total settlement required by the lease company. So, why would a business not protect assets against the price paid for a vehicle, its value or outstanding finance by purchasing GAP insurance? And why wouldn’t a private individual want to do the same to protect their investment in their own car?
What is GAP Insurance?
GAP stands for Guaranteed Asset Protection and can cover the difference between the amount you paid for a vehicle, and the amount your comprehensive insurance policy pays out.
For example, if you crash and write off your new vehicle a year after buying it, your insurer will only pay out its current value. If you bought the vehicle outright you may have the funds to make up the shortfall but a lot of vehicles are leased or under a contract hire arrangement. Neither are designed to be terminated early.
The value of motor vehicles start to depreciate as soon as ownership is taken. Neither you nor your business has any control over the termination charge applied. More motor insurers when settling total loss claims are using an average of CAP and Glass’s Guide valuations, which can reduce the market value of vehicles even further. Motor GAP provides reassurance that in the event of a total loss you are protected.
What Does Gap Insurance Cover?
We are able to provide an additional layer of protection to private car, commercial motor and fleet insurance buyers and limit exposure to early termination charges.
- No vehicle value limit
- In the event of a loss, GAP insurance pays the outstanding amount owing to the finance/lease company or 25% of the motor insurer’s total loss settlement figure up to the maximum indemnity limit, whichever is the greater
- Covers up to £250 towards any unrecoverable policy excess you may be required to pay
- Extends to include a temporary replacement car or van up to 3.ST GVW for up to 42 days once the motor insurer has confirmed the total loss. The temporary replacement vehicle will include motor insurance.
- Covers all vehicles, whether privately owned or by a business, and not just those on lease or finance
- If you have fleet cover, you can add vehicles at any point as long as they are under 10 years old
- Annually renewable product
- Can cover director/personal vehicles insured under the motor fleet
- Short period cover available to help create common renewal dates
- Covers cars and commercial vehicles up to 44 tonne
Examples of GAP Costs
| VEHICLE | Mercedes Sprinter | |
| Termination charge at loss | £19,457 | |
| Motor insurers Market Value settlement: | £13,000 | |
| Customers shortfall | £6,547 | |
| VEHICLE | DAF FT CF 4X2 44 Tonne | |
| Termination charge at loss | £43,483.62 | |
| Motor insurers Market Value settlement: | £30,500.00 | |
| Customers shortfall | £12,983.62 | |
| VEHICLE | Scania R500 | |
| Termination charge at loss | £31,288.46 | |
| Motor insurers Market Value settlement: | £22,650.00 | |
| Customers shortfall | £8,638.46 | |
Prices from as little as £75 + IPT per year for a mini mixed fleet (correct as at May 2021)
Talk to Anthony Jones
Anthony Jones is a specialist commercial motor broker and has a dedicated team of motor experts who will make sure you have the appropriate protection in place for your vehicles and motor fleet. Get in touch today to discuss your requirements.
