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Agreed Value GAP Insurance
Have you never heard of Agreed Value GAP Insurance before? You may not be alone. Contrary to popular belief, more than one type of GAP Insurance exists. Each type is designed for a different set of circumstances and can provide a different kind of protection.
Most GAP Insurance products are linked to the leasing or purchasing of a vehicle from a VAT-registered motor dealer within a set timeframe. Products like Return to Invoice, Vehicle Replacement GAP and Lease & Contract Hire GAP all come into this category.
What about if you bought your vehicle from an auction, eBay or a private seller? 
What is Agreed Value GAP Insurance?
How Does Agreed Value GAP Insurance Work?
Who Needs Agreed Value GAP Insurance?
What is Agreed Value GAP Insurance?
Agreed Value (also known as Return to Value) GAP Insurance is a unique form of Guaranteed Asset Protection (GAP) Insurance. Unlike the other forms or GAP cover mentioned above, AV GAP can be purchased for vehicles purchased privately or from an auction, where a VAT Invoice is not provided. 
Agreed Value GAP can also provide extended protection when your original GAP cover (RTI or VRI) has ended and you intend to keep the vehicle longer.
How Does Agreed Value GAP Insurance Work?
How AV or RTV GAP works is straightforward yet effective. When you purchase this insurance, the policy protects the current market value of your vehicle when taking out the policy. This allows the market value to be covered if the car is written off following an accident, flood, fire or theft during the policy term.
Suppose your vehicle is stolen or declared a total loss by your motor insurer. In that case, the policy will pay the difference between the market value settlement paid by your comprehensive insurer and the original value from Glass's Guide on the day of the policy purchase.
What is Glass's Guide?
Glass's Guide celebrates its 90th anniversary in July 1933. First published by William Glass, it provides trusted trade and retail values on various vehicles. Vehicle retailers, finance houses and insurers alike use it. It is often described as the 'bible' of the motor industry.
Who Needs Agreed Value GAP Insurance?
AV GAP Insurance is suitable for many potential situations. These include:
Where you buy the car from a private seller and not from a VAT-registered dealer or broker.
Your current RTI or VRI policy is expiring, and you are looking to keep the current car longer.
It should be noted, however, if you are looking to take an Agreed Value or Return to Value GAP following the expiry of a previous RTI or VRI policy, you are only covering the value of the vehicle when you purchase the AV policy. This is not the original purchase price covered by Return to Invoice GAP or the replacement cost covered by a Vehicle Replacement GAP policy.
Although the AV GAP cover is only to the market value when you buy the policy and not the original price you first paid, if you intend to keep the car for a few more years, then the AV GAP can still provide valuable protection. This is because your vehicle value can still fall from the value protected by the AV policy over some time.
Agreed Value GAP Insurance vs Other Types of GAP Insurance
AV or RTV GAP Insurance stands out from other types of GAP Insurance due to its unique features. Unlike Return to Invoice or Vehicle Replacement GAP Insurance, AV GAP Insurance does not require an invoice from a VAT-registered motor dealer.
AV GAP effectively fits a situation in that the other types of Guaranteed Asset Protection could not provide you with eligible cover.
A Top Up GAP policy is the only option you could consider as an alternative to AV GAP. This is more of a short-term solution. Top Up GAP is an annual, renewable policy that adds 25% to the motor insurers' settlement, up to a maximum of £10,000.
Where Top Up GAP has an advantage is where you are still determining if you will keep the vehicle for more than a year. In this situation, a 25% top-up on the motor insurer's comprehensive settlement could be more than the amount the AV GAP policy can cover. 
Agreed Value GAP FAQs
Can I get Agreed Value GAP Insurance for a used car?
AV GAP, or Return to Value GAP, is suitable for used cars, especially if bought privately or from an auction, not from a VAT-registered motor dealer. This type of insurance can provide the coverage you need, protecting you from future depreciation and ensuring that you are financially protected in the event of a total loss.
This is done by protecting you from the cost of a vehicle of similar value as yours on the day you pay for it. This is done by paying the difference between the settlement by the car's insurer and the vehicle's value on the day you bought the policy.
What happens if the market value of my car increases after I take out Agreed Value GAP Insurance?
Agreed Value GAP covers the market value of your car at the time of taking out the policy. If the market value of your vehicle increases afterwards, it won't affect your coverage. Your policy will still cover the original value of your car as determined by Glass's Guide at the time of purchase.
If the market prices increase, then that situation may be brief. If you buy a 3 or 4-year Agreed Value policy, then you could still expect the value of the vehicle to depreciate from this value over time.
Does Agreed Value GAP have limits on vehicle age or mileage restrictions?
Agreed Value GAP products will have mileage and age restrictions directly or indirectly. Many will state the maximum age and mileage for the vehicle at the start of the policy. For example, no car may have more than 80,000 and be more than eight years old when you buy the policy. Whatever age and mileage you get to during the policy should be fine.
The indirect impact of age and mileage is that most AV GAP products state the vehicle must be in Glass's Guide so they can get a valuation. If the car is too old and/or has exceeded a particular mileage, then Glass' Guide may be unable to provide a valuation.
No valuation means no cover.
Can I transfer my Agreed Value GAP if I sell my car?
Typically, a GAP Insurance policy is non-transferable as they are tied to a specific vehicle and value with Agreed Value. However, checking with your insurance provider for their policy is always best.
Some providers may allow you to transfer your policy to a new vehicle, but this is usually subject to certain conditions and may require an additional premium.
In conclusion, understanding Agreed Value GAP Insurance and its differences from other types of GAP Insurance can help you decide on the best coverage for your vehicle. Always consult a professional insurance advisor to ensure you choose the policy that best suits your needs.
Published 18/7/23, written by Mark Griffiths
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