Did you know that you could be out of pocket by thousands without GAP insurance? Many motorists assume that GAP insurance is not worth the money or do not know what it is, but it is important to be aware of its value and how it could offer financial protection as well as peace of mind.
The Financial Implications of a Write Off
So, what exactly is GAP insurance and why do you need it? If you were to write off your car in an accident or if it was lost or stolen, you would only receive the current market value in an insurance payout. Due to depreciation, this could leave you short thousands of pounds and in a tough financial position when it comes to replacing the vehicle.
Depreciation
GAP insurance covers the shortfall between the insurance payout and the amount outstanding on a finance agreement/amount originally paid. When you consider that new cars can lose as much as 35% after just 1 year, it is clear that this is a sensible form of insurance and takes away the worry of owing more on your car than what it is worth and having to pay for a car that you no longer own.
As an example, if you buy a car for £15,000 or take out finance to this amount and the car is written off a month later, your comprehensive insurance provider only values the car at £10,000 leaving you out of pocket by £5,000 or owing the same amount to a lender with no car to show for it.
A Worthwhile Cost
This means that GAP insurance is certainly worthwhile for those that are driving new cars or vehicles that are still relatively new as you could lose out on the most amount of money. It is less of an issue for older cars, but still worth considering as it can provide financial protection and peace of mind.
The Dangers of Driving
Nobody expects to get into an accident, but this can easily happen and you could do nothing wrong but still have your car written off. Additionally, car theft is a growing problem in this country and vehicles that are never recovered are deemed a total loss.
As you can clearly see, GAP insurance is an incredibly useful form of cover and one that could save you thousands of pounds in the event of a write off. Accidents do happen and car crime is a problem and depreciation can make these even bigger issues for motorists. This is why GAP insurance is worthwhile and will help to provide peace of mind.