There is one type of optional car insurance policy that many motorists are unfamiliar with or believe is not necessary, but without this policy in place, they could find themselves out of pocket by thousands of pounds if their car is ever written off or stolen. This is GAP insurance which is a type of policy that every motorist should be aware of and consider. Whereas it’s an ‘additional cost’ on top of what you may already be paying for your car, it can save you money in the long run.
GAP Insurance Defined
So, what exactly is GAP insurance? This is a type of insurance that will cover the shortfall between an insurance payout and the amount originally pair or the amount outstanding in a finance agreement. Many motorists are unaware, but if your vehicle were to be written off or stolen then a comprehensive car insurance provider would only pay the current market value for the vehicle. This is a way to protect your overall investment, instead of just a part of it.
Due to depreciation, the current market value could be a significant amount less than what you paid, especially if you bought the car new. Cars depreciate by an average of 60% after just three years of ownership which means that you would take an enormous financial hit. As an example, if you bought a brand new car for £12,000, you would only receive £4,800 if it were written off three years later – this would not give you anywhere near enough to afford a similar replacement. Considering cars start to depreciate as soon as they leave the dealer, ensure you protect yourself should the worst happen is important.
Accidents Can Happen
GAP insurance is not a requirement but it is a smart form of cover because accidents happen all the time on UK roads. Even if you are a fantastic driver and have never been involved in an accident before, your car could easily become written off whether this is an accident that was not your fault or an accident by driving in hazardous conditions (winter can be dangerous in the UK). Additionally, car crime is a huge problem in the UK with many cars never recovered (these are written off); this mean that you would protected should you car be stolen with no chance of finding it thereafter.
As with any type of insurance, it is always best to shop around when looking for GAP insurance to find a suitable level of cover for your needs. Generally, it is best to obtain GAP insurance from a specialist, such as ALA which would give you the best flexibility and deals.
Overall, GAP insurance is a smart level of cover especially for those that bought their car new or almost new. This could save you thousands of pounds in the event of a write off and provide you with important peace of mind knowing that you are financially protected if this ever happens to you.