How is GAP insurance regulated? Insurance broker rules for GAP policies

Regulation for insurance policies or other financial services ensures that companies operate fairly. Examples of financial services include dealing with investments, loans, assets or insurance contracts.

The Financial Conduct Authority regulates financial services in the UK, while the Prudential Regulation Authority helps to promote financial propriety in the firms it regulates. Although these regulatory bodies act independently from the government, financial services are required to be regulated by the FCA.

This article discusses who regulates GAP insurance policies and why these regulations are important. We also help you identify when a GAP insurance provider is being transparent. Finally, we introduce our GAP contract underwriters and explain how your insurance policy is secured.

Who regulates GAP insurance policies?

Guaranteed Asset Protection insurance, being a financial protection service, must be regulated by the Financial Conduct Authority (FCA). The FCA helps to support a healthy and successful economic system and ensures that customers get a fair deal from insurance brokers.

The Financial Conduct Authority is independent of the government and requires a fee from its regulated firms. In return, companies can prove to customers that they’re fair and transparent with their financial services

Why are there special rules in place for GAP insurance?

In 2015, the FCA rules for GAP insurance policies changed. Unlike motor insurance policies , there was less market competition for GAP insurance, causing inflated and unfair prices. Customers were also poorly informed about the service. As a result, many customers were not getting good value for money on GAP insurance policies.

Some of the prescribed information rules for GAP insurance are detailed below:

• The insurer should show the total premium separately from other prices.
• The insurance company should outline the policy benefits and exclusions with links to relevant documents.
• The insurer should outline the policy duration.
• The insurance company should explain that GAP coverage is optional.
• The insurer should record the date the customer received the above information.

Some additional rules apply to GAP insurance services sold by the motor dealer or vehicle finance creditor.

• Insurance providers should make customers aware of independent brokers, such as ALA
• Dealerships cannot sell GAP insurance the same day customers enter the dealership.

These rules help to ensure that customers can make an informed decision about GAP insurance.

How can you tell if a GAP policy is fair?

When searching and comparing GAP insurance deals, transparency from the insurance company is important. The following things signal that a GAP insurance policy and provider are fair and honest:

• Insurance premiums are stated in full with full breakdowns of monthly costs (if applicable).
• Policy benefits and features are outlined clearly on the insurance broker’s website.
• Eligibility requirements are clearly outlined and easy to find on the website
• Policy documents are attached and simple to find
• Customers are made aware of policy lengths before purchasing a policy.

At ALA, we make finding the perfect policy easy. We outline the benefits of our four policies: Back to Invoice Plus, Vehicle Replacement Plus, Contract Hire Plus and Agreed Value GAP. Read our info cards to determine which policy best suits your vehicle and whether you are eligible for GAP insurance.

Our simple and handy quote calculator will calculate your insurance premium based on your motor vehicle details; you will only be able to choose from policies you’re eligible for. After completing your quote, we outline the total premium to pay upfront and the total to pay by monthly direct debit instalments over ten months. We will also show you the cost of each monthly payment.

We make it easy for our customers to make an informed decision about GAP insurance because our prices are fair and extremely competitive. We also do our best to ensure our customers are covered when they need us – in most cases, if your comprehensive insurance company pays out, so will we.

Get a GAP insurance quote now!

Who is the underwriter for ALA’s GAP insurance policies?

Underwriters create the policy conditions for insurance contracts, including ours. They assess, evaluate and assume the risk of policyholders based on certain details such as vehicle value, the period of ownership, the car’s age and mileage. A premium is quoted based on these assumptions, and the policyholder will receive a unique policy schedule document, including applicable policy limits and other details.

At ALA, we have several underwriters. The underwriter of your GAP contract depends on several factors, but in most cases, Financial & Legal Company Limited underwrites our policies.

How is your GAP contract protected?

Finally, when purchasing a GAP insurance policy, you want to be assured that you will get the coverage you paid for. As mentioned, there are very few reasons for GAP insurance claim denials after receiving a motor insurance settlement.

However, the Financial Services Compensation Scheme protects every ALA GAP contract. This Scheme acts as an insurance policy on your insurance. If the underwriter does not having the funds to pay out, the scheme will pay out on our behalf.

Although we receive very few complaints, The Financial Ombudsman Service works with us to manage and customer complaints relating to our service. Before a complaint is necessary, our team do our best to come to a resolution.

Read about our GAP insurance policies or build a quote now!