What is GAP Insurance, and do you need it?
What is GAP Insurance
These days, most finance and leasing companies will at some point mention the words ‘Gap Insurance’. Gap Insurance is simply what most fully comprehensive car policies offer as a new car replacement during the first 12 months of ownership. If your car is written off or stolen after this period, the insurance payout is likely to leave you out of pocket. However, insurers will only cover the current market value of your vehicle if you do have a successful claim. Most of the time this is somewhere just above the trade price but significantly lower than the retail price. What GAP does is cover the difference between this payout, or the market value of the vehicle, and the amount you originally paid for it. It therefore eliminates the risk that your vehicle insurer will not pay out enough to pay off your finance in the event of a loss.
Why you might need GAP Insurance
Getting yourself GAP insurance can be a useful tool if you have recently bought your vehicle using finance or lease, especially if the loan value is high. For instance if you have chosen a contract hire finance deal, where you have signed up to a long term rental of the vehicle with specific mileage allowance. If you had an accident in these terms, you could be left without a car or still owing thousands in the outstanding finance if you are not covered with GAP insurance. If you are concerned about your new car depreciating in value, the quicker your car loses it’s value, the less you might get back from your insurance company if you had an accident, or your car was stolen.
For more information on all things Gap Insurance, or just general questions about possible finance and lease offers we have for you. Feel free to give us a call on 01825 701200