If you have been getting Gap Insurance quotes online, you may have seen that time after time you may be asked to indicate a ‘claim limit’ you may want on the policy. The claim limit is the maximum that you will be able to get in settlement on the policy, and therefore is pretty important to consider.
Gap Insurance claim limit
We have talked plenty of times about the ‘claim limit’ on a Gap Insurance policy before, and a few relevant articles will be listed at the bottom of this post. However, it is the point that can be misunderstood more than any other when it comes to Gap Insurance, even by those selling it!
The problem with Gap Insurance products in motor dealers is that they tend to have very limited ranges of products to offer. Many of these products have fixed ‘claim limits’ so the maximum permitted to be paid out is set from day one. The problem with this is that if this claim limit is exceeded then the Gap Insurance policy may not be able to perform in the way you would expect.
For example, you take a 3 year Return to Invoice product from your motor dealer, for a £23,000 vehicle with a fixed maximum claim limit of £10,000.
If you make a claim in say two and a half years time, and the vehicle is now only worth £11,000, then the difference is actually £12,000. If your claim limit is only £10,000 then you will only get this figure, leaving you £2,000 short of the figure you may expect.
The major problem with this is that many motor dealer sales staff may not even know that there is a limit on what can be claimed. This means that this £2,000 shortfall may come as a complete shock, accepting that £10,000 is not too bad but perhaps not quite good enough.
The alternative route of buying Gap Insurance from a specialist independent provider means that you could be buying Gap Insurance from someone with an insurance background, and not a car sales background. Therefore they may understand the limitations of the product better, but may have a limited appreciation of the depreciation of your motor vehicle.
Why claim limit is important for your protection
There are a number of Gap Insurance providers who do specifically employ staff with a motor trade background, but of course you are unlikely to be able to spot these amongst the crowd.
Our advice would be that any company who discusses the ‘claim limit’ of a quote probably understands the significance of it. If it is not mentioned at all, you could be wary that you are being offered a limit that may not be enough for your purposes. You maybe offered a premium that could be attractive compared to others who may have offered an appropriate limit on a quote.
Always consider your claim limit carefully. Too much and you are paying for cover you may never benefit from, too little and you could be under insured.