Vehicle Replacement GAP Insurance


If, through accident, theft, fire or flood, your vehicle is subject to a total loss – or written off, as we say in non-insurance circles – you may find yourself in a bit of a pickle when it comes to sorting out the financials.

Why? Let’s say you – or rather, your finance company – paid £20,000 for your vehicle. At the time of your total loss claim, the cost of replacing that car might now be £21,500, either because you cunningly scored a discount on it that’s no longer available, or the manufacturer has cheekily hoisted up the price after a facelift or some other change to the model.

Now, the finance company will have paid the dealer £20,000 but, thanks to interest rates, the money you owe the finance company might be more than that. Let’s call it £23,000.

And there’s the problem. Your normal insurance payout based on comprehensive market value might only be £15,000, leaving you £8,000 short of what you need to pay off the finance people.

ALA’s Vehicle Replacement Plus GAP Insurance is designed to stop the finance company’s representatives coming round to relieve you of that money, or if you haven’t got it, goods to the value of that money. Vehicle Replacement Plus GAP will either pay whatever amount is outstanding to your finance company, in this case £8,000 (that’s on top of your normal insurance payout) or replace your vehicle on a ‘like for like’ or a ‘new for old’ basis, depending on which of those figures is the highest when you make your claim.

In simple terms, Vehicle Replacement Plus GAP Insurance leaves you free and clear of outstanding finance and keeps your telly in the corner of the living room rather than in the back of a bailiff’s van.

If your car is not brand new you could consider ALA’s Back to Invoice Plus policy as it gives you the protection of GAP insurance but for less money and might be more suitable. The invoice price and the replacement cost might not be the same, so the policies could pay up to a different amount and this is something to consider.

You should consider Vehicle Replacement Plus GAP Insurance if you want to guard yourself against vehicle depreciation, the loss of value of your vehicle (as opposed to what you paid for it – they aren't the same thing), and the likelihood of the manufacturer increasing the prices of their products.

Vehicle Replacement Plus GAP Insurance policies can run for up to 4 years and are protected under the Financial Services Compensation Scheme.

You’ll be eligible for Vehicle Replacement Plus GAP Insurance if you can tick all these boxes:

  • you’ve bought a vehicle that’s under 7 years of age and has covered less than 80,000 miles
  • the car is worth less than £150,000
  • you collected your vehicle within the last 90 days
  • it's either owned outright or covered by a Hire Purchase or Personal Contract Purchase finance agreement
  • it was bought from a VAT-registered dealer
  • it’s not ‘excluded’ (in other words, it is listed in Glass’s Guide, and it’s not used for hire or reward, deliveries or as a taxi.)

ALA will also pay up to £250 of your motor insurance excess and won’t charge you for policy amendments to policy details.