Auto Gap Cover

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Planning on buying a new car? It’s important to know how you will pay off instalments if it gets stolen or damaged beyond repair

Auto Gap Cover

As you know, a new car’s value significantly drops the moment you drive it out of the dealership. But the amount you owe the bank for a loan does not decrease. This is where this kind of cover can be useful.

What is Auto Gap Cover?

Gap cover is also sometimes called credit shortfall cover or top-up insurance, among other terms. Its purpose is to cover the difference between your car’s retail value (which is often the amount your car is insured for) and how much you paid for it when you bought it, i.e. the amount you owe on your loan.

Let’s use an example to show how auto gap cover works:

Imagine you bought your car for 150 000UAD and you have paid 20,000 UAD of your financing loan. It gets irreparably damaged in an accident, but your insurance provider only pays out its current retail value of 100,000UAD. You would still owe 130 000UAD for the car, so you would have a shortfall of 30,000UAD. Without gap cover you would be stuck with an unexpected 30, 000 UAD debt. But with gap cover, your insurer would pay that outstanding amount to your financer.

What Is/Isn’t Included in This Cover?

Gap cover will cover you for any shortfall between the amount owed on your vehicle financing loan and what you are paid out if the car is stolen or damaged beyond repair following an accident. You will be responsible for any additional money owed for things like custom installations.

Should I Get Auto Gap Cover?

  • If you are still paying off the cost of your vehicle, then adding this option to your existing policy can provide excellent peace of mind. No one wants to have to continue paying for a vehicle that has been rendered unusable.
  • If you’re purchasing a brand new car, you might want to consider buying gap cover. New vehicles can lose up to a fifth of their original value within the first year of ownership, even when kept in immaculate condition. Within half a decade it could be worth just fifty percent of what you originally paid for it. So, if your vehicle gets stolen or damaged beyond repair, you will face a definite value gap.
  • Can you afford the shortfall yourself? If you have enough finances set aside in case your car is written off or stolen, then gap cover might not be crucial. You could make up the shortfall yourself, if necessary.

If you’re in the market for auto gap cover in the UAE, there is no better place to assess your options than with CompareInsurance. Find and compare all sorts of insurance options in moments and discover the best options for you.

In this article


What is Auto Gap Cover?

What Is/Isn’t Included in This Cover?

Should I Get Auto Gap Cover?
COMPARE CAR INSURANCE QUOTES

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