The internet is a wonderful place if you are looking to research just about any product you like. Indeed it has become almost second nature for consumers to open up their laptop, smart phone or desktop computer to discover detailed information on anything you may wish for. However, the area of Gap Insurance for motor vehicles has been one, until recently, where the UK consumer has struggled to find independent expert views on the subject.

Gap Insurance comparison

That is not to say you cannot find information on Gap cover, however it is abundant on websites run by providers of the product (possibly not to ‘independent’?) or internet forums. The issue with internet forums is that some of the posters who assert themselves as ‘experts’ have a poor knowledge of the modern Gap Insurance product. Some of the descriptions of how the products may work, or features to look out for are poorly understood by many posters on internet forums, and this is not surprising as the products have evolved quite dramatically over the last few years.

Where to look for Gap Insurance advise

For those seeking expert advice there are actually a couple of good resources you could try. In early 2012, Which? released a report into Gap Insurance in the UK, both in its magazine and later on the Which? website. This report was quite basic in nature, but did run through some fundamentals and gave a comparison for products offered at motor dealers, and a series of leading online providers.

For a much more ‘in depth’ analysis of product features, the recently released Motor Gap Insurance Star Ratings by Defaqto give a far better picture when you wish to compare products and providers. With Vehicle Replacement Insurance in particular, where the differences in policy features and terms can make such a large difference in the event of a claim, the ability to identify a ’5 Star Rated’ product above that of a 2 or 3 Star is much easier for the consumer.

Remember the ‘devil is in the detail’ with any type of Gap Insurance, even more so with VRI Gap, so a report like that compiled by Defaqto really is well worth looking at before you make any decision on Gap Insurance protection.

If you are looking for the best product in any walk of life then it is natural that you would look for some guidance. This can come in the form of endorsements, internet forums or even price comparison sites. This task is quite straightforward when you look at the likes of motor insurance or household cover, but Gap Insurance is far more specialist in nature.

So when you are looking into Gap Insurance there are only a very small number of resources from experts on the subject.

Gap Insurance research

In February 2012 the consumer giant Which? published a report and guide on the purchase of Gap Insurance in the UK. The report compared a number of the leading specialist insurers with products offered at motor dealers, and perhaps unsurprisingly the conclusion was that better deals may be found away from the forecourt.

The report does not really get into the subtle differences between policy terms that can be so important, as the gap insurance cost is not necessarily the only important factor. Industry experts Defaqto have released a new ‘star rating’ report on Motor Gap Insurance, where 100 products in the market were rated on policy terms. Only ten products achieved the top ’5 star’ ratings, and interestingly many of these were for independent brands. However, some of the lowest rated products were also from online providers, so if you are looking for some guidance then it may be a good idea to take a close look at the report.

What is the biggest problem facing Gap Insurance?

Gap Insurance on internet forums?

Of course you can trawl the internet forums to see what people think of the various Gap Insurance providers, but you may also want to take this with a pinch of salt. Who knows who is placing their opinions on a product, how do you know they do not work for the company in question?

If you are looking for a good place to compare Gap Insurance, then these two resources are a good place to start.

When it comes to gap insurance, one of the most common questions asked is, what claim limit should I choose. The answer to that question is, there is no answer. Nobody knows exactly what a car is going to be worth in a particular amount of time and therefore a claim limit is really only an estimation of what is going to work for you. Different things can influence the value of a car, depreciation, appreciation, the economic climate, public opinion, therefore a claim limit should be based on the best possible outcome you can see, after taking everything into account, that you believe will cover you and your situation effectively.

A claim limit is a very important part of your gap insurance protection, it essentially is the upper limit of any gap claim you will make in the future, your claim limit is the absolute maximum amount you will receive, if you happen to make a claim. This means that if your claim limit is not big enough and cannot perform, then you may lose out on money. This is why claim limits should be considered extremely carefully.

For example, if you had taken out a 4 year Return to invoice gap insurance policy on your vehicle, which cost £15,000, lets say that the claim limit you chose was £10,000. If you were 3 years into your coverage and your vehicle happened to be stolen or you were involved in an accident where it was written off. Due to car depreciation, your vehicle may have a market value of around £8,000. This therefore is the amount your own motor insurance will award you on that day. This means that  to “Return you to your invoice price” the gap insurance must pay out £7,000. Your claim limit is £10,000 and therefore is a sufficient amount of money to return you back to the original price you paid. If your car had dropped in value further, to around £4,000, then the gap would have been £11,000 and therefore you would be £1,000 out of pocket because your claim limit is only £10,000.

As this points out, the claim limit is extremely important when deciding on your gap insurance policy. There is no certainty from anybody about the right claim limit you can choose, nobody knows the exact depreciation rates of a particular car over certain periods of time. Obviously, if you are looking for a longer claim limit, your vehicle is likely depreciate more, depending on the amount of time that has gone by.

You should also think about which claim limit is correct for you, due to the type of gap insurance that you desire. For example, Finance gap insurance will cover your outstanding balance that is owed to your finance company, therefore a smaller claim limit is likely to be sufficient. A vehicle replacement gap insurance policy will probably need a higher claim limit, as this type of gap coverage ensures that you can buy the same standard of vehicle again, due to car appreciation this is likely to be a significant amount more than you originally paid and so you need a claim limit sufficient to perform.

As this indicates you could take out gap insurance for the same vehicle and same period of time, though the claim limit could be different depending on your particular needs. The claim limit you decide on when taking out gap insurance is 100% your decision and may not be an easy choice, however taking into account what type of cover you are looking for and the particular circumstances of your vehicle, should lead you to making an informed decision that should be sufficient if you should ever need to make a claim.

If you purchased your new car in September, then time is ticking away for you to be able to insure it with gap insurance, as to qualify for the higher levels you must have taken delivery of your car within 180 days. Some dealerships will only offer you gap insurance from the day you take delivery, some online brokers may give you up to 90 days, though we can allow 180.

Maybe you have no idea what gap insurance is, you may have heard someone talking about it and would like to know a little more before your 180 days is up. Unbeknownst to many people, if you were to be involved in an accident in which your car was written off, or your car was stolen, your motor insurance would only award you with the sum of money your car was worth at the time. You may believe that your car’s value will not depreciate and it may be a hard fact to swallow but every car depreciates from the minute you drive away from the showroom in. For example, if you buy a Ford Ka for £9,725 , within one year it would have depreciated to £6,190, in it’s second year £5,069, in the third year £4,101 and £3,286.

So, if you have a crash, or your car is stolen, two years after you purchase it (looking at the example) your motor insurer will only award you £5,069, meaning you will be £4656 out of pocket. This is where gap insurance comes in. Gap insurance sits on top of your motor insurance and depending on which type you choose, will either pay your outstanding finance (Finance/Contract hire gap insurance), pay the remaining amount to top you back up to the amount you paid (Return to invoice gap insurance) or award you with the amount necessary to buy the exact same standard of vehicle again, mileage, age etc (Vehicle Replacement Gap Insurance).

Finance Gap insurance, if your car is written off or stolen, your finance company will still expect your remaining finance to be paid off, this may be a significant amount more than what your motor insurance awards and therefore without gap insurance, you will find yourself without a car and with a significant sum to pay.

Return to invoice gap insurance, if your car is written off or stolen, will sit on top of your motor insurance, awarding you with the amount necessary to get you back to square one, the amount you paid for your vehicle. Therefore you can pay any excess payments or costs you see fit and look to organising a new vehicle and ensuring that you have not lost out on any money.

Vehicle replacement gap insurance, if your car is written off or stolen, along with your motor insurance, will award you with the amount necessary to be able to buy the exact same car again. Brand new versions of cars appreciate over the years and you could find your car costing a significant amount more than you paid for it. Also, this is the perfect gap insurance if your vehicle is acquired through some sort of promotional offer. Vehicle replacement gap insurance will ensure that you have the exact amount of money to be able to buy the exact same standard of vehicle again, age, mileage etc.

Gap insurance is literally the only way to look after your vehicle investment fully. With gap insurance, you can rest assured that if the worst does happen and your car is written off or stolen, that you are completely financially sound. You will not have the added pressure, after getting over an accident or a theft, or having to acquire a new vehicle, or to settle any outstanding finances. Do not let this opportunity pass you by, if you bought your car in September, time is truly running out, you will soon be outside of the 180 days.