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Gap Insurance

What is Gap Insurance?

Gap insurance, or shortfall insurance as it’s commonly called, covers the difference between your insurance payout and what you still have left to pay on your vehicle loan in the event of total loss due to accident, theft or damage.

FACT: Having comprehensive motor vehicle insurance does not cover any shortfall or gap that occurs when a car is written off while it’s still under finance.


If you are paying off your car and it is declared a total write off due to an accident, fire or theft, your financier still expects that you pay out the remainder of the finance contract.

In addition to this, your insurance company may only be able pay out for the loss of your vehicle, compensating you the market value, or the agreed value if you chose this policy option.

Sometimes the amount your insurance company pays may be less than you need to pay off the rest of your finance agreement and so there is a “shortfall” between the two. This gap is often because a vehicle’s market value decreases a lot quicker than the finance on the car is paid back.

DID YOU KNOW: Gap insurance is only available when you enter into a new finance contract at the point of purchase and the vehicle or asset is comprehensively insured.

Is Gap Insurance worth it?

For the entire period of your car loan you’ll have peace of mind knowing that if something unfortunate happens to your vehicle you might not be out of pocket. The gap between the insured value of the vehicle and the balance required to pay out the loan may be covered, depending on the level of cover. Refer to the insurance Product Disclosure Statement (PDS) for other information.

TIP: You may be able to pay the gap insurance premium as a lump sum or it may be applicable to add it to the finance on your car.

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