GAP Cover

Also known as Shortfall insurance, this is another popular and relatively cheap form of valuable cover.

Problem

Your car or boat has been written off, either stolen or damaged beyond repair. Your comprehensive insurer pays the market or agreed value, but another $3,300 is needed to pay out your loan.

Solution

GAP insurance could save you from a huge financial burden. Cover is provided for 'the gap' up to $10,000. And the option of extra cover for any additional costs due to the inconvenience of the total loss, such as registration & insurance costs for the replacement vehicle.

Why does the 'gap' occur?

Several factors are involved, borrowing to pay for various costs associated with buying a car or boat such as on road costs, and the value falling faster than the loan balance, especially if it’s a brand new car. As soon as you drive that new car out of the car yard gates, you’ve usually lost a few thousand dollars in car value instantly.

How long is there a 'gap'?

Generally, your maximum exposure to 'the gap' will occur from the day you take delivery to perhaps the end of the second or third year of the loan and depends upon the term of your loan.

Do I have to pay a premium every year?