When it comes to GAP insurance, many motorists believe that it is not essential and especially if it is a brand new car. This is not the case and it is dangerous thinking because it could leave seriously out of pocket.
GAP Insurance Explained
For those that are unaware, GAP insurance is an optional policy which will cover the shortfall between an insurance payout after a write-off and the amount outstanding on the finance agreement. Some believe that their comprehensive policy will pay the full sum, but this is not the case as they will only pay the market value which can be significant less due to depreciation. Depreciation can be as much as 35% after just one year of ownership and over 50% after three years. As an example, if you purchased a car for £19,000 and it was written off after just one year then your insurer would pay £12,350 leaving you out of pocket by £6,650.
As you can clearly see, this is a large amount of money and it could make it challenging to purchase a suitable replacement. Some motorists will say that their vehicle will never be written off, but accidents occur far too often and these are often not your fault. In addition to this, vehicles are deemed written off if stolen and never recovered – new cars are often targeted by criminals as they know that they are high value and 33% of stolen cars are never recovered. GAP insurance provides you with financial protection as well as peace of mind knowing that you will not be left out of pocket.
Obtaining GAP Insurance
GAP insurance can be obtained from a dealership, but you are better off purchasing it from a specialist like ALA so that you can benefit from the best deals and flexible cover with fewer exclusions. It is hoped that you will never need to make a claim, but it is better to be safe than sorry when it comes to insurance and particularly when you consider just how dangerous the roads can be.
Some motorists will state that GAP insurance is not necessary for a new car, but when you consider just how rapid depreciation is as soon as you drive away from the dealership you will quickly see that it is a smart investment to make. It could save you thousands of pounds if you were to get into an accident and also provide complete peace of mind knowing that you protected.