1. What is Gap Benefit?

Gap benefit is the difference between what you owe on your vehicle (or its original cost) and what your insurance company pays out if your vehicle is written off or stolen. This is particularly important in Australia where vehicle values can depreciate quickly.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Vehicle Cost — The original price or current amount owed on the vehicle
• Insurance Payout — The amount your comprehensive insurance will pay in case of total loss

Explanation: The calculation shows you how much gap insurance would cover if there's a difference between your vehicle's value and the insurance payout.

3. Importance of Gap Insurance

Details: Gap insurance protects you from financial loss when your vehicle is written off and the insurance payout is less than what you owe or the vehicle's original value. This is common due to rapid depreciation of vehicles.

4. Using the Calculator

Tips: Enter the original vehicle cost or current amount owed, and the expected insurance payout. Both values must be positive numbers, with payout typically less than vehicle cost.

5. Frequently Asked Questions (FAQ)

Q1: When is gap insurance most useful?
A: Most valuable in the first 2-3 years of a new vehicle's life when depreciation is highest, or if you have a loan/lease on the vehicle.

Q2: What types of gap insurance are there in Australia?
A: Common types include finance/lease gap, return-to-invoice, and replacement vehicle gap coverage.

Q3: Does gap insurance cover the full difference?
A: Most policies cover up to a certain percentage (typically 25-30%) of the vehicle's original value.

Q4: Is gap insurance required by law in Australia?
A: No, it's optional coverage, but highly recommended for new vehicles or those with financing.

Q5: Can I get gap insurance after purchasing a vehicle?
A: Yes, but there's usually a time limit (often 12-24 months from purchase) to purchase gap coverage.