Did you know that you would only receive the current market value from your comprehensive insurance provider in the event of a write off? In this event, this could leave you short thousands of pounds and struggling to pay off the finance or afford a replacement car. It is for this reason why GAP insurance is such an important type of cover yet one that many motorists are unfamiliar with or believe that they do not need.
What is GAP Insurance?
GAP insurance is an optional form of insurance that will cover the shortfall between the insurance payout and the amount outstanding on the finance agreement/amount originally paid. Cars are constantly depreciating in value, but this is at its fastest in the first year when a vehicle can lose around a third of its value and over 50% after just 3 years. This means that GAP insurance could save you thousands of pounds and it is particularly important for those that buy new.
Is it Required?
It is important to note that GAP insurance is not a legal requirement, unlike regular car insurance. It is an optional policy, but it is a smart option that could save you a huge amount if your car is ever involved in an accident and declared a total loss or it is stolen and never recovered. Car accidents are common and even the best motorists can be involved in a write off without doing anything wrong. Additionally, car crime is a big and growing problem in the UK. Having GAP insurance in place can be helpful in terms of providing financial protection and peace of mind.
When is GAP Insurance Needed?
GAP insurance can be purchased by any motorist and it can benefit all. There are times where it is particularly important, however, such as those that buy new, those that take out a large loan to pay for a vehicle and those that purchase a vehicle that depreciates quickly. Additionally, if you have a long termfinance deal then GAP insurance is smart.
If you want to buy a new car to replace your existing one then GAP insurance is worthwhile as well as if you own money to a car finance company. If you are happy with a replacement car that is not new or you have a used car, GAP insurance is not as useful but it is still worth considering.
Hopefully, this post will be educational and show you the value of GAP insurance. While it is not a requirement, it is a sensible form of cover that could save you a fortune if your vehicle is ever written off. It makes a lot of sense in certain situations but is a useful type of cover for all motorists that should be considered.
