GAP Insurance (also known as Motor Equity Insurance) is insurance against a shortfall that may occur in the event that your vehicle is stolen or written off, and your Comprehensive Motor Vehicle Insurance payout does not cover the loan balance outstanding on your finance agreement.
This could potentially leave you with a shortfall of thousands of dollars.
A shortfall may occur when you include purchase related expenses such as stamp duty, registration, dealer delivery or comprehensive insurance cover in the loan which do not add to the vehicles value. Or, it may occur when the vehicles value falls faster than the loan balance due to the combined effect of accrued interest and the vehicle depreciating.
Note that GAP Insurance and Purchase Price Insurance are distinct and different insurances. Purchase Price Insurance covers a potential shortfall between your Comprehensive Car Insurance payout and the price you initially paid for your vehicle, whereas GAP Insurance covers a potential shortfall between your Comprehensive Car Insurance payout and the payout figure for your car loan.
Benefits of GAP Insurance
- Reduces or eliminates your financial exposure to a shortfall between the insurance payout and the outstanding balance on the loan (up to $40,000)
- Provides the potential to borrow additional funds to purchase a better vehicle
- Provides added protection for your credit rating
- Includes an additional benefit that can provide a one off payment of up to $10,000 for any inconvenience suffered
- The premium covers you for the full term of the loan and can be included in the amount financed
Who does GAP Insurance suit?
GAP Insurance is suitable for all customers who finance a motor vehicle and want peace of mind and protection from financial exposure that may occur should their vehicle be stolen or written off.