What Is GAP – Loan Equity Insurance?
The Gap policy covers some of the difference (the gap) between a total loss payout on your vehicle by your comprehensive insurer and the balance owing under your credit contract. This is called a loan equity shortfall.
- GAP can only be purchased in conjunction with a credit contract, and in the event of a total loss that credit contract must still be active.
- The vehicle must be comprehensively insured.
- The contract is for a maximum of 60 months or the length of the original credit contact.
- Can nly be taken out at the time of vehicle sale.
- Additional benefits only apply to Options 1, 2 and 3.
Option 1: Max Benefit $20,000, Additional Benefits $5,000
Option 2: Max Benefit $15,000, Additional Benefits $4,000
Option 3: Max Benefit $10,000, Additional Benefits $3,000
Option 4: Max Benefit $5,000. Additional Benefits $ nil
Additional Benefits Include:
- Comprehensive Motor Vehicle insurance premium in relation to the replacement vehicle.
- Any Excess in relation to the total loss vehicle.
- On Road Costs comprising of dealer delivery and registration related to the purchase of the replacement vehicle.
- Deposit for a replacement vehicle up to $1000.
- Reimbursement for out of pocket expenses up to $200
- Any amount relating to a prior debt included in the credit contract.
- Reimbursement for the cost of hiring a rental vehicle for a maximum of 5 days.
Example of a GAP Claim
You have an accident in your vehicle and the comprehensive insurer deems the vehicle to be a total loss. The insurer pays out to the financier, leaving a $5000 outstanding balance on your credit contract that you are liable for and which must be paid immediately. If you had GAP Cover, it would provide a payment of the outstanding amount less the comprehensive insurance premium and the original GAP Cover premium saving you potentially thousands*.
Purchasing a replacement vehicle can also be an expensive exercise which is where the additional benefits under options 1, 2 and 3 really help out.
*Example only. There may be other deductions depending on the status of your credit contract.
This is only a summary of cover; please see full policy document for full terms, conditions and benefits.
Click here for full policy: GAP Full Policy