Every motorist knows that they need car insurance, but did you know that there are other optional policies that should be considered? GAP insurance is an optional type of insurance that many motorists are unaware of, which could end up costing them thousands of pounds if they are in an accident or if the car is stolen and never recovered. Keep reading to find out more.
What is GAP Insurance?
Essentially, GAP insurance is a type of insurance policy that will cover the shortfall between the amount paid by your comprehensive insurance policy in the event of a write-off and the amount originally paid or how much is left on the finance agreement.
It is not common knowledge, but a comprehensive insurance policy would only pay the current market value of a vehicle when it is written off. This means that you could end up out of pocket by thousands of pounds in the event of a write-off, which could then make it hard for you to replace the vehicle.
How Does it Work?
Cars depreciate by as much as 35% after just 1 year and over 50% after three years, so those that buy new are putting their investment at risk by not getting GAP insurance. Additionally, many people opt for finance deals when buying a car, so if this vehicle were to be written off but you still owe thousands of pounds, it can create a very difficult financial situation for the motorist.
As an example, if you buy a car for £20,000 but it is written off after just two years, your comprehensive insurance policy would only pay out £11,000 based on the average depreciation rate. This would then leave you short of £9,000, which isn’t exactly an easy amount to come up with for most. GAP insurance will cover this shortfall and provide important peace of mind.
Should You Get It?
It is understandable that a motorist believes that they do not need GAP insurance, especially if they are a confident driver that has never had an accident before. The truth is that accidents happen all of the time and a motorist could simply be blindsided one day that could end up in the car being written off.
On top of this, car crime is a growing problem in the UK and this often ends up with vehicles being deemed a total loss. GAP insurance provides protection but it also provides peace of mind, which is something that everyone needs when the cost of motoring is so high.
Hopefully, this post will encourage you to think about getting a GAP insurance policy to provide protection in the event of a write off. This can be traumatic enough, so you do not want financial worries on top in this situation.