GAP insurance is a type of cover that many motorists are unaware of, which could be costly and could see them out of pocket by thousands of pounds in the event of a write-off.
Cover the Shortfall
In a write-off, a comprehensive insurance policy would only pay the current market value of the vehicle, which could be a significant amount less due to depreciation. GAP insurance covers the shortfall or the amount left outstanding on the finance agreement to ensure that a motorist does not suffer financially. While hopefully, you will never be in an accident that results in a write-off, you will find that you could be in a difficult financial spot without GAP insurance in place.
When you consider that new cars depreciate by as much as 35% after just one year and over 50% after three, it is clear that you are looking at a huge financial hit without having coverage in place (especially if you drive a newer car).
As an example, if you purchased a car for £20,000 which was written off after two years, your comprehensive car insurance would only cover £11,000 leaving you short £9,000 (based on average depreciation rates) and this could make it hard to afford a replacement.
Accidents Happen & Theft
No motorist expects to have their vehicle written off, but accidents do happen and you could do nothing wrong and still be involved in an accident that will see an insurance company deem the car a total loss.
On top of this, automobiles are written off if they are stolen and never recovered and car theft is a big problem. As with many types of insurance, you will find that it is better to be safe than sorry when it comes to GAP insurance and it can provide important peace of mind knowing that you have protection in place no matter what.
As with any type of insurance, you should always read up on GAP insurance and learn about what is and is not typically included. You should also shop around to find the best level of cover for your particular needs, which will usually involve going with an independent GAP insurance specialist as this is usually how you get the best and most flexible levels of cover and superior customer service.
Driving around without GAP insurance in place is a major risk, especially for those driving newer cars. It is an optional policy but certainly one that should be considered, particularly when you consider how frequent accidents are and how common car theft is. GAP insurance will provide financial protection as well as peace of mind knowing that you are covered.