Updated: Jul 29, 2021
Guaranteed Asset Protection (GAP) insurance, or shortfall insurance, is designed to cover the gap of what you owe under your loan and what your comprehensive insurer will pay you if you vehicle is written off. But ASIC's 2016 Report on add-on insurances sold through car dealers found that customers gained little financial benefit from these insurances. Australian's paid over $600 million in GAP insurance from 2013 - 2015 but only 6.3c in the dollar was paid back in claims*.
GAP insurance isn't just seen on cars. Here at Remediator we've seen GAP insurance on Campervans, Motorbikes and Jet Skis too.
Check your loan documents! If you were unaware of the purchase, told it was mandatory or pressured into buying it, you may be entitled to a GAP insurance refund.
* Click on this link to ASIC report 492 to read more about the sale of GAP Insurance in Australia.