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Different Types of Gap Insurance
Which type of gap insurance should you choose? Here are all the types of gap insurance you can cover your car with.
30 April 2019
All types gap insurance policies essentially do the same thing; they are designed to cover the financial gap between what your motor insurance will pay out, if you suffer a total loss of your car through an accident, theft or damage, and the cost of actually replacing the car. The two figures are different because your car insurance will only pay out the value of your vehicle at the time of the incident, not what it actually cost you to buy, and as all cars depreciate in value over time, this could be a difference of several thousand euro.
If you have a car on finance or lease, gap insurance can be important because if your car is written off or stolen, you are still liable to pay all of the remaining finance or lease payments in your agreement or the current full settlement amount, even if your insurance pay-out is significantly less than this sum.
There are different types of gap insurance because some drivers want slightly different outcomes in the event that their car is damaged beyond repair or stolen, and they need to claim on their motor insurance.
Which Gap Insurance to Choose
Whilst all types of gap insurance do a similar thing, there are some small differences between types of policy, which may make a difference to you, depending on what type of cover you need. Some of the main types of gap insurance include:
Return to Invoice Gap Insurance -
Should you suffer a total loss of your vehicle, then ‘return to invoice’ gap insurance will cover you financially for the difference between your car insurance company’s maximum pay-out offer and the exact price that you paid for the vehicle when you bought it.
Return to value Gap Insurance -
‘Return to value’ gap insurance will pay you the difference between your insurer’s maximum pay-out and the value of your vehicle when it was new (even if you bought it as a used car). This type of gap insurance is usually more costly than some of the others, as it could result in a bigger pay-out.
Vehicle replacement Gap Insurance -
‘Vehicle replacement’ gap insurance covers you for the difference between what your motor insurer will pay out for your car, and the cost of replacing it with a brand-new version of exactly the same model, make and specification.
Market Value Gap Insurance -
If you claim for a total loss of your vehicle on your motor insurance, ‘market value’ gap insurance will pay you a percentage of your vehicle’s market value, to cover the gap and potentially more. With PSA, we pay you 30% of the market value of your car.
Whilst all types of gap insurance do a similar thing, there are some small differences between types of policy, which may make a difference to you, depending on what type of cover you need.
Paying for different types of gap insurance
Depending on who you buy your gap insurance from, you may be given different payment options. If the dealer you are buying your car from also offers you gap insurance, they often expect for the premium to be paid up-front, sometimes for up to three years of cover at once.
Many drivers find that it is much more cost effective to buy gap insurance that meets their needs from a third party, such as PSA. If you buy a gap insurance policy through us, we offer two payment options. You can either pay with one annual premium for a year’s cover or, for no extra cost, you can pay with twelve monthly installments instead.
Click below for more details on gap insurance from PSA Insurance Solutions.
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PSA Insurance Solutions Ltd Reg No: C83206 is a limited liability company under Maltese Law, having its registered address at: MIB building 53 Abate Rigord Street Ta’ Xbiex Malta, Tel + 356 22 58 34 92. The company is enrolled to act as an insurance agent in terms of the Insurance Intermediaries Act, 2006 by the Malta Financial Services Authority (MFSA), Notabile Road, Attard BKR 3000, Malta.