It’s not that widely known that most car insurance policies will only offer you a new car replacement if you make a claim within the first 12 months’ of ownership. After this time if your car is stolen or written-off then the insurer will only pay you the market value of your car – something which is likely to be above the trade price but well below the retail price you paid. This could leave you significantly out of pocket which is where GAP Insurance comes in.
What is GAP Insurance?
Guaranteed Asset Protection (GAP) insurance offers you peace of mind by ensuring that should the worst come to the worst, you will receive the full amount you paid for your car*. This is especially comforting if you have a finance agreement on your car as it will ensure that you don’t end up facing any nasty bills to bridge the gap between what you owe on your car loan and what your insurance has paid out.
How does GAP Insurance Work?
While there are a number of different forms of GAP insurance they all work on the principle of making up the difference between the car’s value when it was stolen or written-off and what you paid for it*. For example:
If you bought a Mini Cooper for £15,000 and three years’ later it was stolen when its value had dropped to £7,500, then your GAP insurance policy would make-up the £7,500 difference between what your car insurance policy paid out and what the original purchase price was.
Do you need GAP Insurance?
If you’re considering GAP insurance you may want to ask yourself the following questions:
Have you bought your car with a personal loan or finance?
Accidents do happen and if one does and your car is written-off or stolen you could be left facing a hefty bill from the finance company.
Is your car liable to quick depreciation?
All cars depreciate and popular cars from brands such as Peugeot, Vauxhall and Ford can depreciate quickly, leaving you with less of a payout than you might like or need.
Did you buy your car on a contract hire deal or personal leasing plan?
On these packages you are effectively signing up to a long-term rental package on the car. If you have an accident or the car is stolen you could be left car-less and still owing thousands in outstanding finance.
If your answer to any of the above questions is yes, then you may want to consider GAP insurance.
How to choose the right GAP for you?
There are several types of GAP insurance policies and the easiest way to ensure that you get the right one for you is to talk to your local Coversure office. Coversure’s insurance experts will talk you through the various options – Return to Invoice, Finance GAP, Return to Value GAP and Equivalent Value GAP – and help you receive the motoring peace of mind that comes with GAP insurance.
For more information get in touch with your local Coversure Insurance broker today.
*Terms and Conditions apply