Thinking Man on Couch

Considering 'deferring' your Gap Insurance start date?

If so, this is an important short read

Our Gap Insurance policies cannot be deferred, because doing so can leave you with risks.

Some motor insurers do not clearly or fully define the phrase first year ‘new for old’ and it's often very different from what the policyholder expects.

Here are a few of many examples our customers have reported - from some major insurance companies!


  • If the replacement vehicle cannot be sourced from dealer stock and delivered within 3-6 weeks, the policy will only pay ‘market value’ at the time of write off – and thats NOT new for old,

  • Some insurers have been known to only give ‘new for old’ on the basic vehicle list price and this, therefore, excludes the cost of factory fitted options and dealer fitted accessories,

  • If the vehicle is stolen, only ‘market value’ applies, therefore new for old cover will not apply to theft.

  • If your motor insurance policy is due for renewal in that first year, will your motor insurer honour the ‘new for old’ arrangement?

  • If your motor insurance is due for renewal in that year and you intend to ‘shop’ around for a cheaper offer, do bear in mind the new insurer may not honour the ‘new for old’ because the vehicle was not insured with them from new,

  • If you are financing, will your motor insurer clear an outstanding finance balance if the balance exceeds the purchase price of the vehicle in that first year?

Contract Hire Agreements

If you are using a Contract Hire agreement, Gap Insurance is important from day one of your agreement. In these agreements and in circumstances of a write-off, your leasing company is almost certainly likely to be legally entitled to a) the insurance settlement from your fully comprehensive motor insurance and b) all or some of the rentals you had contracted to pay for the full period. This is because the vehicle is the leasing company's security. When their security no longer exists as a result of a write-off, most insurers will end your agreement and call in all monies due to them. This can leave you with a substantial debt - a debt the Gap Insurance would contribute to or eliminate entirely. To confirm whether you are likely to have a 'financial loss' in the first year, simply ask your leasing company to put their answer in writing. 

Seek clarification and confirmation from your motor insurer - in writing.

We would encourage you to seek clarification from your motor insurer to enable you to fully understand what they will and will not pay for in the event of a claim in the first year. In the event of a write-off within the first year, if your motor insurer provides you with a new replacement vehicle - you will not need to make a claim against your Gap Insurance policy and you may transfer the policy free of charge to the replacement vehicle.

Please remember - throughout the market, Gap Insurance cannot be purchased at any time. It is only available to buy for a short period after vehicle delivery. If you wait until your 'new for old' period expires - you will not be in a position to buy Gap Insurance.

We hope this helps. Please let us know if you have any questions