What should influence my decision making when considering GAP insurance?

This falls into three categories:

• The basics:
  • The likely depreciation level of your chosen vehicle, which will help you decide how much GAP cover to choose.
  • The period over which you will need cover e.g. if you regularly change vehicles every 3 years, then 3 years might be the term you choose.
  • How you purchased your vehicle e.g. if you bought it using finance, you are likely to owe the finance company more than you bought the vehicle for in the early years of your hire contract, so that should be factored into the initial depreciation/cover level choice.
  • Whether you are even concerned that if your vehicle is written off you may have to downgrade your next vehicle choice.

• Your budget: There are innumerable types of GAP policies to suit personal preference or budget e.g.
  • The most expensive types will provide you with a like for like replacement vehicle (or as near to if models have changed in the meantime).
  • The cheapest will provide you with a policy based on a cover level that you choose to cover the shortfall and that will be the maximum that the GAP insurer will pay out no matter how large the GAP but the onus is on you to pick a cover level that will be sufficient for your purpose. These basic policies also have few frills, even so, the frills (or small additional benefits) are relatively minor in comparison to the benefit of the GAP cover itself.
  • In between these are a variety of options that may offer such things as free hire vehicles while claims are being processed (which is provided by the third-party’s insurer if you’re involved in a no fault traffic accident), minimum minor cash sums paid irrelevant of GAP payouts or policy excess covers of differing levels (which are often covered by other policies or are at acceptable levels that would not be an inconvenience).

• Vehicles and conditions: The GAP policies will vary dramatically, mainly in the following ways:
  • A potential policyholder’s eligibility criteria may differ e.g. age (whereas these policies do not).
  • They won’t insure some brands or classes of vehicles.
  • They’ll charge different rates for different brands.
  • They’ll define the classes of vehicles differently e.g. one may class a Mercedes as a Prestige Vehicle (high end) and charge a higher premium, yet another insurer may not and some may not even cover the most expensive Mercedes models.
  • Limit on dealer fitted options (which doesn’t apply to these policies).
  • How long since purchased e.g. these policies cover vehicles purchased within 180 days of GAP policy purchase, some may only allow 90 days.
  • They’ll charge different rates for EVs.
  • They’ll only cover vehicles whose values at the time of purchase are within a certain maximum limit e.g. up to £75,000 yet another may have an upper value limit of £125,000, such as these policies.
  • The ages of the vehicles and the mileage on the vehicle’s odometer they will insure will vary. These policies have no mileage restriction provided the vehicle hasn’t exceeded an age limit of 10 years old or the maximum value of £125,000.
  • Territorial limits where cover is provided may vary.
  • The nitty gritty policy conditions about what is included or excluded can vary.
    Your main insurance can also have a bearing too because if it’s conditions preclude a write-off settlement in certain circumstances, if unacceptable to you, they may negate any benefit that a GAP policy would otherwise provide.
  • And as if that all isn’t confusing enough, they will use different names for their policies and benefits.