Buy a Contract Hire, Invoice or Replacement GAP insurance policy incorporating one or more Market Value clause and you're highly likely to receive a reduced payout at the time of claim. The sole purpose of a Market Value clause is to ensure that the GAP insurance policy payout is reduced.
The most common Market Value clause amongst inferior GAP insurance policies is in relation to the motor insurance pay-out at the time of claim. In simple terms, if the motor insurer's payout is less than what the GAP insurer's preferred valuation "guide" says that your car is worth, the GAP insurer will not cover what they will perceive to be an underpayment by your motor insurer.
To add insult to injury though, if you bought a used car, a Market Value clause within an Invoice or Replacement GAP insurance policy may well be called upon to allow the GAP insurer to revalue your vehicle at the time you first bought it. If they find that their guide said your vehicle was worth less than the price you actually paid for the vehicle, the GAP insurer will not cover what they will perceive to have been an overpayment on your part.
One Market Value clause is bad enough. To suffer the application of both could very well result in a substantially lower GAP insurance payout than what you would have received from a policy that had no Market Value clause at all - A policy like the Contract Hire, Invoice and Replacement GAP insurance policies that have available.
We dropped Market Value clauses from our Contract Hire, Invoice and Replacement GAP insurance policies back in early 2013. Sadly there are other providers that haven't followed suit.
The long and short of it is, a Contract Hire, Invoice or Replacement GAP insurance policy which incorporates a Market Value clause should be avoided - at all costs.
Top-Up GAP insurance:
Top-Up GAP insurance policies DO incorporate a form of Market Value clause - to the best of our knowledge a Top-Up GAP insurance policy with no Market Value clause does not yet exist in the market. A Market Value clause exists with such a policy in order to prevent somebody 'profiting' from their vehicle being written off.
To clarify, in the event that your vehicle is written off (through accident, fire or theft etc) Top-Up GAP insurance will aim to top-up your motor insurance pay-out by a further 25% (limited to a maximum payout of £10,000). If however your motor insurance pay-out is more than the "Market Value" of your vehicle at the time of claim (defined as the "Retail Transacted" value published by Glass's Guide), the Top-Up GAP insurance policy will aim to pay out 25% of the Market Value of your vehicle (rather than 25% of the higher amount paid out by the motor insurer).
If you have any questions about any of the above. Please don't hesitate to contact us.
