Gap Insurance
Bridge the gap between your car insurance payout and what you owe on your loan. Gap insurance protects you from being left with a debt if your car is written off or stolen.
Protect yourself from loan shortfall.
What is Gap Insurance?
When you finance a vehicle, you might assume your car insurance will cover you if something goes wrong. But there is an important gap that many people do not consider: depreciation.
Vehicles depreciate quickly - often losing 20-30% of their value in the first year alone. This means if your car is written off or stolen, your insurance may pay out less than you still owe on your loan. You would be left paying for a car you no longer have.
Gap insurance covers this shortfall. If your car insurance payout is less than your outstanding loan balance, gap insurance pays the difference - protecting you from unexpected debt.
How Gap Insurance Works
An example to illustrate the protection
Your Loan Balance
$35,000
Insurance Payout
$28,000
The Gap
$7,000
Without Gap Insurance
You receive $28,000 from your car insurance but still owe $35,000 on your loan. You must pay the $7,000 shortfall yourself - for a car you no longer have.
With Gap Insurance
Your car insurance pays $28,000, and your gap insurance pays the $7,000 shortfall. Your loan is fully paid off, and you can move on without debt.
What Gap Insurance Covers
Scenarios where gap insurance provides protection
Vehicle Written Off in Accident
Your car is damaged beyond repair. Your insurance pays market value, but you still owe more on your loan. Gap insurance covers the shortfall.
Vehicle Stolen and Not Recovered
Your car is stolen and never found. Your insurance pays out the market value, but depreciation means you owe more than you receive.
Depreciation Outpaces Loan
Vehicles depreciate quickly, especially in the first few years. Your loan balance may exceed your car's value for much of the loan term.
When You Need Gap Insurance
Situations where gap insurance is particularly valuable
Small or No Deposit
If you financed most or all of your vehicle purchase, you are more likely to owe more than the car is worth.
Long Loan Term
Longer loan terms (5-7 years) mean more time for depreciation to outpace your repayments.
New Vehicle Purchase
New cars depreciate fastest in the first 2-3 years, creating the largest gap between value and loan balance.
High-Value Vehicle
The higher your vehicle value, the larger the potential gap if something goes wrong.
Essential Transport
If you rely on your vehicle for work or family, being left with debt and no car could be devastating.
No Emergency Fund
If you cannot afford to pay out a loan shortfall from savings, gap insurance provides protection.
Benefits of Gap Insurance
Why vehicle owners choose gap protection
Loan Shortfall Protection
If your car is written off or stolen, gap insurance pays the difference between your insurance payout and your outstanding loan balance.
Affordable Premiums
Gap insurance premiums are typically modest compared to the protection they provide, and can often be included in your finance.
Get Back on the Road
Without gap insurance, you could be left paying off a loan for a car you no longer have. Gap insurance helps you move on.
Simple Claims
Gap insurance claims are typically straightforward - once your car insurance claim is settled, the gap insurer pays the shortfall.
Include Gap Insurance in Your Finance
When arranging vehicle finance through us, you can include gap insurance in your loan. This spreads the cost over your loan term and ensures you have protection from day one.
Complete Finance Protection
Combine gap insurance with comprehensive car insurance and extended warranty for complete protection. We can help you understand your options.
Gap Insurance FAQs
Common questions about loan shortfall protection
Gap insurance (also known as loan protection insurance or shortfall insurance) covers the difference between what your car insurance pays out if your vehicle is written off or stolen, and the amount you still owe on your car loan. This "gap" can be significant due to vehicle depreciation.
If your car is written off or stolen, your comprehensive car...
If your car is written off or stolen, your comprehensive car insurance pays the market value of your vehicle. If this is less than your outstanding loan balance, you are still liable for the difference. Gap insurance pays this shortfall, so you are not left with a debt for a car you no longer have.
Gap insurance can be valuable if you have a car loan with a ...
Gap insurance can be valuable if you have a car loan with a small deposit, long loan term, or high vehicle value. The cost of gap insurance is typically low compared to the potential shortfall it covers. Consider your personal situation and whether you could afford to pay out a loan shortfall from savings.
Gap insurance premiums vary depending on your loan amount, v...
Gap insurance premiums vary depending on your loan amount, vehicle type, and the level of coverage. Premiums are typically a few hundred dollars per year or can be paid as a one-off amount included in your finance. Contact us for a quote based on your specific situation.
The best time to get gap insurance is when you take out your...
The best time to get gap insurance is when you take out your car loan, as coverage typically needs to be in place before any incident. You may be able to add gap insurance later, but conditions may apply. Speak to us about your options.
Gap insurance typically does not cover loan arrears, volunta...
Gap insurance typically does not cover loan arrears, voluntary termination of the loan, mechanical breakdowns, or situations where you did not have valid comprehensive car insurance. Each policy has specific terms and exclusions that will be outlined in the policy documentation.
Comprehensive car insurance and gap insurance serve differen...
Comprehensive car insurance and gap insurance serve different purposes. Comprehensive insurance pays the market value of your vehicle, which may be less than your loan balance due to depreciation. Gap insurance covers this shortfall. They work together to provide complete protection.
Yes, gap insurance premiums can often be included in your ca...
Yes, gap insurance premiums can often be included in your car finance, spreading the cost over your loan term. This means no upfront payment and protection from day one. Ask us about including gap insurance when arranging your finance.
Still have questions? Contact our friendly team
Get Gap Insurance Protection
Contact us to discuss gap insurance and protect yourself from loan shortfall.