Shortfall Insurance (also known as GAP Insurance) covers you against any ‘shortfall’ in funds between your Loan and an Insurance payout in the event of an Insurance Claim where you vehicle is declared a ‘Total Loss’ (written off or stolen).
For instance, imagine your 1 year old car gets stolen and your Comprehensive Car Insurer declares your vehicle a ‘write off’ then pays out your claim at the current market value of the vehicle of $18,000. If this insurance payout of $18,000 is less than the loan amount still owing on the car (say you still owe $23,458), you are liable to pay the finance provider the balance of the loan (in this instance it would be $5,458) even if you no longer have the car. Shortfall or GAP Insurance covers you for the difference between your Insurance payout and loan balance (up to the claim limits of the cover you select).
Shortfall Insurance is particularly important if you didn’t put down a deposit when you purchased your vehicle and the loan is for the full purchase price or more. This is because vehicles often depreciate faster in value than what most people pay off the loan, creating a greater GAP.
BENEFITS OF SHORTFALL INSURANCE:
- Minimise your risk of paying out a loan on a car that is declared ‘Total Loss’ due to an accident or being stolen
- Some policies provide the additional options to cover:
- Your Insurance Excess payments
- Any Early Termination or Break Cost fees from your lender
- Car Hire while you are without a car
- Provides peace of mind in the event:
- Your car is stolen
- Your car is in an accident
In life, some risks are not worth taking. When it comes to taking out finance to fund an asset, it makes sense to have Shortfall Insurance cover. No one wants to be left making repayments if an uninsured vehicle is stolen or written off. 360 Finance can provide Shortfall Insurance at competitive policy premiums from some of Australia’s leading insurers.
Call our Customer Service team on 1300 361 360 to enquire.