GAP Insurance is a type of insurance policy attached to your car loan that will cover you in the event of total loss. 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.
If your vehicle is written-off while your loan is still active, your financier will still require that you payout the remainder of your car loan. Your comprehensive car insurance policy will cover you for an amount at the time of the loss.
If the payout 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.
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.
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.
Yes you can! 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.
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.