In the event of your vehicle being declared a Total Loss (written off) due to accident, fire or theft, your Motor Insurer will only pay you what they think the vehicle is worth at the time of loss.
Replacement GAP insurance will then pay the difference between your Motor Insurance payout and what it would cost to replace the vehicle at the time of claim with one of the same Make, Model, Age, Mileage and Specification (or nearest equivalent) as the original was at the time you first bought it.
In some cases, this could be detrimental if the Replacement Vehicle at the time of claim is available on sale for less than the original vehicle was bought for. Detrimental… because an Invoice GAP insurance policy covering the original purchase price would have provided a greater payout.
Today we’ve update our Replacement GAP insurance policy terms and conditions so that now, in the event of a claim, the policy will pay the difference between your Motor Insurance payout and the greater of:
- The difference between the Insured Value and the price of a Replacement Vehicle.
- The difference between the Insured Value and the purchase price that you paid for your original vehicle.
This means that in the event that the Replacement Vehicle at the time of claim, is available for LESS than you bought your original vehicle for, we’ll at least get you back up to the original purchase price.