How to save money on GAP insurance

If you’re in the market for a new set of wheels, whether it’s a used car or something brand-spanking new, you may also be in the market for GAP insurance.

Here at The Car Expert, we’ve pulled together some handy tips with help from our friends at ALA Insurance to make sure you can save money on your GAP insurance policy.

Just to recap: GAP insurance (Guaranteed Asset Protection) covers you for any shortfall on your car insurance payout if your car is stolen or written-off during the life of the policy.

Your car insurance policy pays out on the market value of the vehicle at the time of the incident, not the amount you paid for the car or how much you still owe the finance company. If you end up having to paying thousands of pounds to make up that difference, you’ll be left in a right pickle – without a car and a potentially massive debt.

Taking the stress out of that eventuality is GAP insurance, which will cover the extra needed after your motor policy has paid out. It can be particularly useful if you’ve taken finance to buy the car, since the car’s depreciation value could leave you well short of what you need to repay the finance company.

So how can you save money and get the best possible value from your GAP insurance policy?

1. Don’t buy from the dealership

A dealership is usually the first place most people hear about GAP insurance, and not coincidentally, it’s the place you’ll most definitely be quoted the dearest policy.

Changes in the law gives car buyers a couple of extra days to hunt out the best GAP insurance policy. So if you’ve found this article by researching exactly what GAP is and whether you should have it, congratulations! You’ve now discovered the gateway to a much cheaper and/or better GAP policy.

2. Consider buying a longer (or shorter) policy

As well as outrageously expensive, dealership GAP policies tend to be pretty rigid. It’s usually a one-size-fits-all policy, which may not suit your needs very well.

If you’re taking out a four-year car finance agreement, a three-year GAP policy means you won’t be covered for that last year, which is when the market value of your car is going to be at its lowest and GAP is potentially most valuable.

The reverse is also true: if you change your car every two years, why would you want to pay for a three-year GAP policy?

Specialist GAP insurance providers have a much wider range of offers than car dealers, so you’ve got a much better chance of finding a specific policy that covers exactly what you need (and nothing that you don’t) for the best possible price.

3. Scrutinise the terms and conditions

It’s a well-known fact that not all insurance policies are created equally. Here, we compare the different insurance providers for the general policy differences.

It matters if you’re a commercial vehicle driver, drive on the continent or outside the UK and how many miles your car has done when you’re taking the policy out.

Some GAP policies will have a cap on the maximum amount they pay out, so it’s important that you undertand exactly how much you’re covered for and how the payment process will work when you make a claim.

4. Can the policy be transferred?

So you’ve decided to purchase a GAP insurance policy for, let’s say, a four-year period. But what happens if your circumstances change 18 months later, and you have to sell your car and buy a new one?

Some insurers will allow you to transfer your GAP policy across to your next car. Not all providers do, so you should check this before taking out a policy, but this simple action could save you shelling out all over again.