Gap Insurance: Aviva's Offerings

Aviva offers auto insurance in Canada, but it is unclear if this includes GAP insurance. GAP insurance, or Guaranteed Asset Protection insurance, covers the difference between the amount your car insurer pays out if your car is stolen or written off, and the price you paid for it. This type of insurance is particularly useful if you have a large loan to pay off on your car or are concerned about its depreciation.

Aviva's auto insurance options

Aviva offers a range of auto insurance options to suit different needs and vehicle types. Here is an overview of their products:

Aviva Car Insurance

Aviva provides car insurance for various vehicles, including classic cars, electric and hybrid vehicles, campervans, and more. They offer optional add-ons to enhance your coverage. You can get a quote for Aviva Car Insurance quickly and easily.

Aviva Multi-Car Insurance

This option allows you to save 10% for each additional vehicle you add to your policy, up to a maximum of 5 vehicles registered at the same address. This discount does not apply to optional add-ons.

Electric Car Insurance

Aviva's Electric Car Insurance is designed specifically for electric and hybrid vehicles, helping you transition to a greener future.

Quotemehappy Connect Car Insurance

Quotemehappy is a member of the Aviva family, offering an online car insurance option for individuals aged 17-29. It involves monitoring your driving through an app, which provides a personalised renewal price and regular rewards for safe driving. However, the policy may be cancelled if unsafe driving is consistently observed.

Third-Party, Fire, and Theft Cover

This type of cover is for those who do not require comprehensive insurance. It covers fire and theft but does not cover damage to your vehicle in an accident.

Business Vehicle and Van Insurance

Aviva offers insurance for sole traders and companies that use vehicles for work-related purposes.

Temporary Car Insurance

Aviva provides flexible car cover from one to 28 days, catering to day trips, weekends away, test drives, and other short-term needs.

Learner Driver Insurance

This option is ideal for those learning to drive and offers flexible insurance that lasts from two hours to five months.

Classic Car Insurance

Aviva's Classic Car Insurance provides expert cover for vintage, veteran, and classic cars, ensuring they receive the specialised protection they require.

Motorhome and Campervan Insurance

Aviva offers specialist campervan cover for long trips and road trips, ensuring you have the necessary protection while on the road.

Aviva also provides optional add-ons to enhance your auto insurance policy, such as Motor Legal Services, courtesy car, protected No Claim Discount, Motor Injury Protection Plus, and Personal Accident cover. Additionally, they offer standalone breakdown cover with different levels of protection to suit your needs.

What is GAP insurance?

Guaranteed Asset Protection (GAP) insurance is an optional insurance policy that covers the difference between the amount your car insurer pays out if your car is stolen or written off, and the amount you paid for it or the amount you owe on it if you have finance. This type of insurance is particularly useful if you want to replace your car with a brand new one or if you have taken out finance to buy your car.

When you buy a new car, its value drops by a third as soon as you drive it off the forecourt. Its value will then fall by an average of 60% over three years, according to the AA. If your car is written off or stolen, your insurer will only pay out the resale value of your car at the time of your claim, which may be less than you paid for the car and may not be enough to pay off any finance you took out to buy the car.

GAP insurance is not essential as your car insurer should already pay out for a replacement car of a similar age and condition. However, GAP insurance can be useful if you want to buy a new car to replace your old one or if you have a finance deal and would owe more to the finance company than you would get from the insurer.

There are three main types of GAP insurance:

• Return to invoice cover: This pays the difference between your car insurer's maximum payout and the exact price you paid for the car.
• Return to value cover: This covers the difference between your insurer's maximum payout and the value of the car when it was new. This type of cover is aimed at car owners who bought their car second-hand.
• Vehicle replacement cover: This pays the difference between the insurer's total loss payment and the cost of replacing it with a new car of the same model, make and specifications.

GAP insurance is available from dealerships or specialist brokers and typically costs between £100 and £300 for three years of cover.

Who needs GAP insurance?

GAP insurance is an optional product that is not necessary for everyone. However, it can be beneficial in certain situations. Here are some factors to consider when deciding if you need GAP insurance:

You have a valuable car

GAP insurance is designed for individuals who own valuable cars that are likely to have decreased in value since their purchase. If you have a car that is subject to depreciation, GAP insurance can help protect its value.

You have a finance agreement or loan for your car

If you have a finance agreement or a personal loan for your car, GAP insurance can provide valuable protection. In the event that your car is written off or stolen, you will still be responsible for paying off the remaining balance on your loan. GAP insurance will cover the difference between the insurance payout and the amount you owe, ensuring that you are not left with outstanding debt.

You want a brand-new replacement car

If you prefer to have a brand-new replacement car in the event that your current car is written off or stolen, GAP insurance can help bridge the gap between the insurance payout and the cost of a new car. This is especially useful if you are concerned about not getting the original value of your car back from your insurance company.

You are concerned about depreciation

Cars can lose value quickly, especially in the first few years of ownership. GAP insurance can help protect you from the financial impact of depreciation by ensuring you receive enough money to purchase a new car of the same make and model.

You have a long-term lease

If you have a long-term lease on your vehicle, GAP insurance can provide valuable protection. In the event that your leased car is written off, you could be left without a car and facing a bill for thousands of pounds. GAP insurance can help cover these costs.

It's important to note that GAP insurance is not a substitute for standard car insurance. It is designed to work alongside your existing insurance policy and provide additional protection in specific situations. When deciding if you need GAP insurance, carefully consider your individual circumstances, the value of your car, and the terms of your existing insurance policy.

Types of GAP insurance

Gap insurance is designed to cover the difference between the amount your insurer pays out if your car is stolen or written off, and the price you paid for it. It is intended to work alongside your standard car insurance, topping up the difference between what they will pay and what you'll need to get back on the road.

There are several types of Gap insurance to suit different people's circumstances, budgets, and preferences. Here are some of the most common types:

Return to Invoice Gap Insurance (RTI)

Return to Invoice Gap Insurance is designed to ensure that you get back exactly what you originally paid for your car if it is written off. For example, if you paid £20,000 for your car but your car insurer only pays out £13,000, RTI Gap insurance would cover the remaining £7,000. This type of insurance is available for both new and used cars, but it is more commonly associated with new cars.

Return to Value Gap Insurance (RTV)

Return to Value Gap Insurance, also known as Agreed Value, is available for both new and used cars but is more commonly associated with used cars or those bought from private sellers. Instead of using the purchase price as the benchmark, RTV Gap insurance uses the value of your car at the time of taking out the policy. This means you can buy the cover at any time, rather than within a limited period after purchasing your car.

Vehicle Replacement Gap Insurance (VRI)

Vehicle Replacement Gap Insurance is the most comprehensive level of Gap insurance. This type of insurance will cover the cost of either the amount you paid for the vehicle, the cost of a brand new replacement car of the same age and specification, or the amount of finance you owe on your agreement. Vehicle Replacement Gap Insurance can be particularly useful if you bought your car at a discount, as it covers any rise in the value of your car.

Finance Gap Insurance

Finance Gap Insurance is for drivers who have purchased their vehicle using car finance, including Hire Purchase and PCP. In the event that your car is written off, this type of insurance will cover any outstanding finance payments you have left to pay, including any balloon payments. However, it won't leave you with any money to put towards a new car, as it simply pays off the finance company.

Negative Equity Gap Insurance

If your finance settlement is higher than the cost of your car, the extra sum is referred to as 'negative equity'. Negative Equity Gap Insurance covers this situation, which usually occurs if you part-exchanged a previous car before paying off its finance, transferring the remaining debt to your current car.

Contract Hire Gap Insurance

Contract Hire Gap Insurance is only available for those who lease their car, with no option to buy it. The current market value of the car will be covered by your car insurer, and the gap cover will pay any remaining lease payments.

How to get GAP insurance

If you're buying or leasing a new car, you can get Guaranteed Asset Protection (GAP) insurance from a dealer or your auto insurance company. GAP insurance is optional if you're financing a purchase, but it might be required if you're leasing a vehicle.

When you buy or lease a car, the dealer will likely ask if you want to purchase GAP insurance when you discuss your financing options. However, buying GAP insurance from a dealer can be more expensive if the cost of the coverage is bundled into your loan amount, which means you'll be paying interest on your GAP coverage.

You can typically add GAP coverage to an existing car insurance policy or a new policy, as long as your loan or lease hasn't been paid off. Buying GAP insurance from an insurance company may be less expensive, and you won't pay interest on your coverage. If you already have car insurance, check with your current insurer to determine the cost of adding GAP coverage to your existing policy. Note that you need comprehensive and collision coverage to add GAP coverage to a car insurance policy.

You can also buy GAP insurance from specialist firms or standalone providers. The Financial Conduct Authority, which regulates the insurance market, encourages customers to weigh all their options and not just buy from a car dealer. Car dealers must now provide 'prescribed information' to help buyers make better-informed decisions and cannot sell GAP insurance on the day the car is sold. They must wait until the fourth day after handing over the prescribed information. However, there is nothing stopping you from buying GAP insurance from another provider as soon as you buy your car.

Frequently asked questions