In the event of your vehicle being declared a Total Loss (aka “written off”) as a result of an accident, fire, theft or flood, your comprehensive Motor Insurance policy settlement will be based on the depreciated market value of your vehicle at the time of the claim.
How Invoice GAP insurance then works, depends on whether you bought the vehicle cash outright or, you financed it.
We’ll deal with both examples below and for the purpose of each example, we’ll assume you bought the car originally for £22,000 and that its total loss valuation at the time of claim is now £10,000.
Invoice GAP insurance for a Cash Buyer
If your comprehensive motor insurance policy values the vehicle that you bought for £22,000 at £10,000, this represents a £12,000 “gap”.
For a cash-buyer, an Invoice GAP insurance policy would be aiming to cover this £12,000 gap between the £10,000 total loss valuation of the vehicle and the £22,000 original invoice price.
Invoice GAP insurance for a Financed Car
In this example we’ll use the same figures as above (£22,000 original purchase price with a £10,000 total loss valuation) but we’ll also throw a £12,000 finance agreement settlement figure in to the mix. So…
The car you bought for £22,000 has just been written off, and it’s been valued at £10,000 but, you owe the finance company £12,000.
Without Invoice GAP insurance:
In this example, if you did not have Invoice GAP insurance, you’d need to be funding the £2,000 shortfall to the finance company out of your own personal funds, plus you’ll also need to fund the replacement vehicle too.
With Invoice GAP insurance:
In this example, Invoice GAP insurance would be aiming to top-up the £10,000 total loss valuation of the vehicle to the £22,000 original invoice price you bought the vehicle for. In theory you’d then have £22,000 to clear the £12,000 you still owe the finance company and, you’d be left with £10,000 to put towards the cost of replacing your now written off vehicle.
Ts & Cs apply.
Additional cover options available:
Optional: Prior-Vehicle Negative Equity Cover
If you’re part-exchanging an old vehicle against the new vehicle purchase, and you’re re-financing negative equity from the old vehicle as part of the purchase of the new one, you can upgrade your GAP insurance cover to include cover for up to £2,000 of negative equity brought forward from your previous vehicle.
Optional: Total Loss Courtesy Car cover (TLCc)
In the event of an incident occurring with your vehicle, your motor insurer will normally provide you with a courtesy car, but often only up and until they deem the vehicle to be a total loss (aka a “write off”), after which they’ll often take their courtesy car back pretty quickly.
To protect you from this, you can upgrade your GAP insurance cover to include the provision of a courtesy car for you to use for up to 28-days in the event of a total loss event.