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Gap Insurance from a Claim Handler’s Perspective

I have been a GAP Claim Handler for nearly 3 years, and before I did this, I wasn’t sure what GAP Insurance was having previously worked in General Motor claims/repairs. However, having seen first-hand what this kind of insurance does for customers, I can appreciate the value of these products.

Covering the depreciation in value between what you have paid for a vehicle and what your vehicle is worth if it is declared a Total Loss is a considerable benefit to customers.
People are generally aware that as soon as you drive a new vehicle off the forecourt you are losing money on that vehicle, however, sometimes people don’t realise just how much. On a new vehicle you will be charged VAT, and this is the first loss you will feel if your vehicle is declared a Total Loss, so this is 20% of the value straight away. You may also put down a deposit on your vehicle, or use another vehicle as part-exchange; again you could lose, as this is something that will not be taken into account when a Motor Insurer writes off your vehicle.

A lot of people are not aware that GAP Insurance can also be purchased on used vehicles. Used vehicles will also depreciate in value from the moment they are purchased, and GAP insurance is there to cover that depreciation for the customer.

Something I hear a lot is, “but the Motor Insurer offers New Vehicle Replacement in the first year. So why would we need GAP?” well, most Motor Insurers who offer New Vehicle Replacement will have criteria that needs to be met in order for this to be offered.

Some Motor Insurers will declare a vehicle a Total Loss if repair costs are as low as 50% of the value, however, other Insurers specify that the repair cost must be at least 60% of the value before they can offer New Vehicle Replacement.

There are various other criteria for New Vehicle Replacement to be offered, for example the customer must generally be the first registered keeper of the vehicle, so if the customer buys a pre-registered vehicle (registered to the dealership before sale) they will not be eligible for New Vehicle Replacement. Also there is usually a maximum wait time for replacement, so if they cannot source the vehicle within a number of weeks New Vehicle Replacement will not be offered.

In any of these instances the criteria for New Vehicle Replacement is not met – the customer will not receive a new vehicle and will generally be offered the current market value of the vehicle, leaving them with a hefty difference between this and what they have paid for their vehicle, sometimes in only a matter of months.

As standard on our GAP Policies, if a customer’s vehicle is replaced under New Vehicle Replacement by their Motor Insurer, and therefore being no GAP Claim to make, we will offer to transfer the cover of the GAP Policy to the replacement vehicle for the full term of the original policy, so the customer does not lose out on any cover.

Did you know that the Motor Insurer’s offer for a Total Loss vehicle can be low?

In the claims that we dealt with in 2016, 24% of our customers received an offer from their Motor Insurer that was not in line with the Retail Value of their vehicle at the date of loss. We use the same ethos as the Financial Ombudsman when it comes to Vehicle Valuations, and they advise that Motor Insurers should offer their customers “what they could reasonably be expected to pay at a dealer for the same make, model, specification & mileage of vehicle” at the date of loss.

Offers that came in under this amount, we disputed on our customer’s behalf by providing insurers with our valuations and evidence that supported an increase in their offers and the increases received by the customers came to an average of £568.73 per claim.

When dealing with claims we work very hard to ensure that the customer is treated fairly at all times, not just by us but also by their Motor Insurer. We also ensure that the customer is made fully aware of how their claim is progressing, and how the claim process works from valuing the vehicle to payment being made. This has given us an average claim time, from first notification to sign off of claim of 19 days which we are constantly striving to maintain. We will continue to look to improve our Claims service into 2017 and beyond to ensure that our customers claim journey is as easy as possible.

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