Theo decided to cancel his GAP insurance policy early when he sold his car. But when he didn’t get all his money back, he came to us to take a look.

What happened

Theo took out 24 months' Guaranteed Asset Protection (GAP) insurance cover on his car, but deferred the start date of the cover for 12 months. 

A year and nine months later, Theo decided to sell his car and cancelled his policy. But he received less than a third of his premiums back. 

He wasn't sure that this was right, so he got in touch with us to investigate his claim. 

What we said

The insurer said that Theo's premium was based on the whole three years. Looking at the policy documents, the GAP insurer wouldn't have had to pay a claim over the deferred period. 

We thought it was unfair to take the deferred period into account and ask Theo to pay for time when he wasn't covered. So we decided to uphold his complaint. 

The policy terms said that Theo was entitled to a proportional refund, so we told the insurer to do this based on 24 months of cover. The policy terms also allowed the insurer to deduct a small admin fee, which we said was fair for them to do.