The Ins and Outs of GAP Insurance
Did you know that as soon as you drive your shiny new car off the forecourt, it automatically depreciates in value?
This means that if you have an accident that results in your vehicle being declared a total loss, you will find yourself facing a loss on the amount that you paid for the vehicle.
But I have fully comprehensive motor insurance… I’ll get my money back, right?
Wrong. Motor insurers will settle at the cars current market value, not the amount that you originally paid. This means that even if you were to unfortunately be involved in a crash a week after acquiring your new vehicle, you would still not receive the purchase value. In fact, new cars typically drop by around 15-35% in value in the first year!
An additional blow that many drivers are unaware of, is that if you have your car on finance, your insurance settlement may not even be enough to cover the outstanding finance on the car. Now you’re facing the cost of purchasing a new vehicle, whilst continuing to pay the remaining finance on a car that you no longer drive.
Wondering what to do to avoid this series of unfortunate events?
GAP insurance is specifically designed to cover the difference in the values between the current market value (what your insurer will pay) and the cost of a new, similar car. It is particularly useful if you rely on your car and would be unable to afford the cost of a new one, of if you owe money to a car finance company.
It is important to remember that GAP insurance does not replace car insurance. You must have fully comprehensive car insurance in place to be able to make a claim on your GAP cover.
Our Personal Lines team are here to talk you through any questions that you might have and advise as to if GAP insurance could be appropriate for you.
Give us a ring on 01270 758070 or contact us here.