Does GAP insurance work if my car is stolen?

Whether you wake up with an empty space on your driveway or find out your pride and joy is missing when the police knock on your door, there are few things worse than getting your car stolen.

But there is a sliver of light in the dark - car insurance.
 
When your car is stolen, your insurance will usually kick in to provide a pay-out equivalent to its current value, but that probably won’t be the same as the amount you paid for it or the outstanding finance you still need to cover.
 
That’s where GAP insurance could make all the difference.
 
Read on to learn more about GAP insurance and whether it’ll cover a stolen car:

What is GAP insurance?

Guaranteed Asset Protection – more commonly known as GAP insurance – is an insurance policy designed to make up the difference between your car’s current value and its price when you bought or financed it.
 
GAP is closely tied to depreciation. That’s the term used to describe the value a car loses over time. Almost all cars (except coveted collectibles) depreciate, especially in their first few years of life.
 
Certain things can affect the rate of depreciation – the car’s condition, mileage, and even its colour could all impact its value – but, in most cases, your wheels will probably be worth less than you paid for them almost as soon as you drive home from the dealership.
 
GAP insurance is in place to cover this gap, so you’re not left out of pocket if your car is declared a total loss and you need to replace it or finish paying off your car finance loan.

What is covered by GAP insurance?

While no-one wants to think about their new set of wheels getting written off or stolen, sometimes it’s best to prepare for the worst-case scenario (can you tell we were in the Scouts?)
 
GAP insurance can help give you some peace of mind as it steps in whenever your standard insurer declares your vehicle as a total loss, whether that’s due to an accident, fire, water damage or theft.

What isn’t covered by GAP insurance?

Unfortunately, the list of things not covered by most GAP policies is a lot longer than those that are.
 
In a nutshell, anything that isn’t labelled a total vehicle loss won’t be eligible (don’t panic; these will usually fall under your fully comp policy instead).

This includes:

• Personal injury or death
• Damage to property
• Car repossession
• Courtesy cars
• A deposit for a new car
• Extended warranties

You might also find your excluded from cover if:

• You don’t have fully comprehensive insurance
• You’ve modified the car
• Your car is repairable

It’s unlikely that you’ll be able to claim if your car was lost due to your own negligence. That might be driving recklessly, lending your car to an uninsured person, or leaving the engine running while you pop indoors to grab a jacket so an opportunistic thief can take advantage.

What should I expect after I make a claim?

Once you’ve submitted a claim to your standard insurer, it’s important that you contact your GAP insurance provider before you accept any settlements. Details of how to submit a claim (including any time limits) should be listed on your agreement paperwork or the provider’s website.
 
You’ll usually then receive two pay-outs: one from your standard insurer equivalent to the car’s value at the time it was written off and one from the GAP insurer.
 
If you have Finance GAP insurance, don’t assume the insurer will automatically pay off your remaining loan balance. You might have to step in to make the payment yourself if the GAP pay-out gets deposited into your account (no matter how tempting it is to spend it!)

What pay-out should I expect?

The exact amount you’ll receive from a GAP pay-out will depend on the type of policy you have.
 
The money you receive will usually be the difference between your standard insurance pay-out and one of the following amounts:

• The price you paid for the car when you first bought it
• The amount it will cost to replace the car with one of the same make, model, and specification
• The car’s value when it was brand-new
• The balance of your outstanding finance or lease payments

How can I choose the right policy for me?

There’s no right or wrong answer when it comes to choosing a GAP policy – or deciding whether to get one at all! It all depends on your individual circumstances and priorities.

Finance, Contract-Hire or Return to Invoice GAP might be right for you if:

• You have outstanding loan payments or a long-term lease
• You’re concerned about your car’s rate of depreciation
• You can’t afford to put down a large deposit on your finance

Return to Value or Vehicle Replacement GAP may be a better choice if:

• You want to buy a new set of wheels that’s equivalent to your old model
• You need access to a certain type of car for work or where you live

Don’t be afraid to shop around to compare prices and double-check all the details like the length of the policy, the excess, how to claim, and how to cancel before signing on the dotted line.

How can I find out more about the exclusions?

Whether you’re considering getting a GAP insurance policy or worried your claim might not be approved, you’ll need to check the exclusions.
 
These should be listed in the terms and conditions of your agreement and explained to you in detail before you agree to take out the policy.
 
Depending on the policy provider, common exclusions include:

• Any type of standard insurance other than fully comprehensive
• Cars that have been modified
• Older car models
• Cars with repairable damage
• Accidents due to reckless driving
• Accidents when a non-named driver was behind the wheel