GAP Insurance for Dummies
GAP Insurance is a type of cover that many motorists have heard of, but many are not entirely sure what it is and whether or not they need it. As it turns out, it is actually a very sensible and smart type of insurance that all motorists should consider as it could save them a fortune if they were to get into an accident or their car was stolen.
GAP Insurance Defined
So, what exactly is GAP Insurance? If your automobile were to be written off by an insurance company, they will only pay you the current value of the vehicle. This is often nowhere near enough to replace the automobile or pay off the hire agreement. A GAP Insurance policy covers the shortfall between the amount that you paid for the vehicle and the payout. Essentially, it protects your investment and ensures that you are not thousands of pounds out of pocket if your vehicle is written off.
Is It Worth It?
Many motorists believe that GAP Insurance is not worth paying for as they think that their vehicle will never get written off. Unfortunately, cars get written off all the time and often there is nothing that the driver can do about it.
There are an enormous amount of accidents that occur on UK roads every single day, the majority of stolen cars become written off if they are never found. Over half a million cars are stolen each year and one-third of these are never recovered.
When you factor in that new cars depreciate up to 77% over a 3-year period and second-hand up to 20% in the first 6 months, it is clear that you could suffer a significant financial loss without GAP Insurance. Many car owners are unaware that insurers settle at the current market value even with fully comprehensive insurance, so they get a nasty shock in addition to being left without a car.
GAP Insurance is available from dealers, but it is best to purchase a policy from a reputable specialist, such as ALA. This ensures that there are no clauses and that you will always receive the difference between the settlement and either the amount that you paid for the car or its replacement cost.
If you were to get into an accident or your automobile becomes stolen and not recovered, it will be written off. This can be a very difficult time, but it would be a lot worse without GAP Insurance as this protects your investment and could save you thousands of pounds.