Gap insurance is typically sold alongside vehicle finance and covers the difference between a vehicle’s purchase price or outstanding finance and its current market value, in the event it is written off before finance has been repaid.
FCA Concerns about GAP Insurance
In March 2024 the Financial Conduct Authority (FCA) raised concerns about the product failing to provide fair value to some consumers in 2023 and wrote to providers asking them to take immediate action to prove customers are getting a good deal.
“Gap insurance can provide a useful service to customers, but in its current form it does not offer fair value, and we want to see improvements. FCA.
What the FCA were really saying is that some providers were taking far too much commission on sales as a percentage of premium charged and this wasn’t fair to the customer. We agree wholeheartedly and we would because this wouldn’t be the case for Anthony Jones Insurance Brokers.
Cost of Losses Growing
Whilst claims frequency for this cover is low compared to other classes of insurance a loss can be expensive. Indeed, the FCA have recently published data to broadly say that the cost of claims doubled or more between 2022 and 2023.
For add-on products, the average payout in 2022 was £2201, in 2023 it had risen to almost £4000. To be clear, Gap Insurance sold by insurance brokers is not classed as an add-on product. This is more the domain of vehicle dealerships. For standalone insurance which we provide it increased from £536 in 2022 to £1222 in 2023.
Our preferred supplier of Gap insurance is Jackson Lee Underwriting, particularly for our Fleet insurance buyers. Jackson Lee are also the preferred supplier to our Insurance Brokers trade body BIBA.
Changes to GAP Insurance
The Benefits of GAP Insurance for Fleets
GAP Insurance for fleets is growing as more and more fleet operators look to protect their vehicle assets against a write off following fire, theft, accident or accidental damage.
- Includes provision of a temporary replacement vehicle for 42 Days during total loss negotiations.
- Designed for companies running 3 or more vehicles.
- Annually renewable policy and will cover all eligible vehicles on the fleet up to 44-ton GVW.
- Short-term policies available
- Allows for movements on/off the fleet with pro rata charging/rebating.
- Our unique policy will apply to vehicles on lease, finance and vehicles owned outright.
This policy is designed to clear the outstanding balance owing to the Finance/lease company if the motor insurer settlement has not been enough to clear it or to top up the motor insurer’s total loss settlement by 25%. Whichever calculation is the greater. (maximum sums insured apply) For more information, this YouTube video explains more about the cover.
How Anthony Jones Can Help You Get Value From Your GAP Insurance
We are an independent insurance broker, so have the freedom to hand-select the underwriters who can offer the right cover and best value for you.
If you are a fleet manager, our friendly commercial motor experts are always on hand to discuss your risk management and insurance requirements. Get in touch on 020 8290 9099, or email commercial.motor@anthonyjones.com.
