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What is Guaranteed Asset Protection (GAP)?

If you have had a car loan, you may have been mis-sold junk insurance and could be eligible for thousands.

It will essentially pay-out the difference between what your comprehensive car insurer pays and the remaining finance amount in the event of total loss. GAP insurance is also known as shortfall insurance, Motor Equity Insurance, Equity Plus or Total Loss Assist.

GAP or shortfall insurance are often charge as a single premium when you take out your car loan. It may have been suggested by your dealership or broker.

It is often listed on your contract and as a result will incur interest charges on top of the premium, meaning it is extremely expensive and often low value.

GAP insurance, also known as Guaranteed Asset Protection insurance, is a type of coverage that is designed to protect car buyers in the event of a total loss. It covers the difference between the amount of money owed on a vehicle and the actual cash value of the vehicle at the time of the loss.

The purpose of GAP insurance is to provide protection for car buyers who have financed their vehicle and have a high amount of outstanding debt on it. In the event of a total loss, such as in a severe accident or theft, the insurance company will only pay the actual cash value of the vehicle at the time of the loss. This can leave the car buyer with a significant amount of outstanding debt that they are still responsible for paying.

GAP insurance helps to bridge this gap by covering the difference between the actual cash value of the vehicle and the amount still owed on the loan. This means that if a car is worth $20,000 at the time of a total loss, but the car buyer still owes $25,000 on their loan, GAP insurance would cover the remaining $5,000. This can provide a significant financial relief for car buyers who have found themselves in this difficult situation.

GAP insurance can be purchased at the time of buying a car, or it can be added later on as an additional coverage. It is typically available for new and used cars, and it can be purchased through the car dealership or directly through an insurance company. The cost of GAP insurance can vary depending on factors such as the make and model of the vehicle, the amount of outstanding debt, and the length of the loan.

One of the main benefits of GAP insurance is that it can provide peace of mind for car buyers who have financed their vehicle and are concerned about the potential financial impact of a total loss. With GAP insurance, they know that they will not be left with a significant amount of outstanding debt that they are responsible for paying.

Another benefit of GAP insurance is that it can provide protection for car buyers who have made a significant down payment on their vehicle. In the event of a total loss, they will still be able to recoup a portion of their down payment through the GAP insurance coverage.

GAP insurance can also be beneficial for car buyers who have purchased a vehicle with a high-interest loan. In the event of a total loss, the car buyer will not have to worry about paying off a large amount of interest on the loan.

Despite the benefits, GAP insurance is not for everyone. Car buyers who are leasing their vehicle or have a low amount of outstanding debt may not need GAP insurance. Additionally, car buyers who have purchased a vehicle with a low-interest loan may not see a significant benefit from GAP insurance. It is important to carefully consider the potential financial impact of a total loss before deciding whether or not to purchase GAP insurance.

In conclusion, GAP insurance is a type of coverage that can provide financial protection for car buyers who have financed their vehicle and are concerned about the potential impact of a total loss. It covers the difference between the actual cash value of the vehicle and the amount still owed on the loan, providing a financial relief for car buyers. It can be purchased through the car dealership or directly through an insurance company, and it can be added later on as an additional coverage. However, not everyone needs GAP insurance, and it is important to carefully consider the potential financial impact of a total loss before deciding whether or not to purchase it.

If the pay-out from your insurer is less than the financed amount owing, this creates a gap or shortfall. A GAP insurance or shortfall insurance policy will cover the gap.

The amount of the gap can be large because the value of your car often depreciates faster than the loan is paid out.

Do I need GAP or shortfall Insurance?

Depending on your needs at the time you purchased your car, you may not have needed to purchase GAP insurance. For example, it would depend on what your motor vehicle insurance covered you for.

Additionally, your GAP or shortfall insurance may only cover you for a certain amount and not the entire GAP. Depending on your level of cover, you may have been excluded under the policy.

Is GAP or shortfall insurance junk insurance?

Your comprehensive car insurance policy may have provided sufficient cover. GAP insurance is designed to cover you if you have comprehensive car insurance. If you do not have comprehensive car insurance, then the gap policy should not have been sold to you.

However, the sales process may have meant that the policy was added without your knowledge or the policy was not explained to you to make an informed decision about whether the policy was worth buying.

GAP Insurance Refund: Can I get my money back?

Yes you can obtain a GAP insurance refund! With help from the Claimo claims team, we’ve helped so many Aussie’s retrieve lost money from GAP insurance premiums over the years.

We will work with the insurance provider to cancel your insurance policy and issue a refund. Our claims team have fantastic success with GAP insurance refunds.

Why Claimo?

Claimo are Australia’s number 1 only claims management company with a 96% success rate. We specialize in add-on insurance refunds. We will help you establish your claim and whether you are eligible to get a refund on a No Win No Fee basis – that means that if we are unsuccessful, you do not have to pay anything.

DISCLAIMER: This article does not provide legal or financial advice. Any information in this article is designed to provide information to consumers who want to learn more about class actions. All information is general in nature. Claimo is not liable for any loss caused, whether due to negligence or otherwise arising from use of, or reliance on, the information provided directly or indirectly, by use of this service. Consider whether the service is right for you. If you are unsure, seek independent legal advice.

What is Guaranteed Asset Protection (GAP)?