How new Car Tax laws may effect your Gap Insurance

From the 1st October 2014 the vehicle Tax Disc will be no more. The little round piece of paper that you got every six or twelve months is being phased out, and the way in which you pay for your vehicle excise duty is changing too.

As before, you can buy 12 or 6 month tax period, however you may also have the option of paying by diredct debit over 12 months (although not on brand new registrations).

What has changed is that the tax on a current vehicle automatically stops when you dispose of it, and the DVLA will automatically generate you a refund. This means that if the vehicle is deemed a total loss at any point, then as soon as the DVLA are informed of this then you will get an automatic refund on any unexpired period, or if you are paying by direct debit then this will cease.

So how may this effect your Gap Insurance?

Well most Gap Insurance policies do not cover any Road Tax charges as part of a claim. Some, like GapInsurance123, will allow for a claim for any Road Tax charges that cannot be recovered elsewhere. Now in truth we have never made much of a big deal of this as it is not very often that you could not claim your unused portion back.

However, we have been aware of some providers who make great noises about claiming back all your road tax charges on their Gap Insurance policy.

That got us thinking.

If you claimed for a brand new TV on your home insurance, and you still had your old TV in perfect working order, would you not be worried about potential issues in making that claim?

You see if you claim for your road tax on a Gap policy after October 1st, then you will get an automatic refund from the DVLA also. Could you be claiming for something you have not actually lost? 

It will be interesting to see how claims are handled on Gap products that say you can claim your Road Tax back. Will the insurers authorise this given the new laws from October 1st? To be honest we do not really know. However, we would suggest that if you are considering a Gap product that markets itself as providing superior cover on the basis that they pay the Road Tax charges then you really have to question the worth of that feature, or even if you will be able to claim on it at all, in light of the upcoming change in law.