Gap Insurance Explained
If you haven’t come across Gap Insurance before, you might be confused about what it is. The name itself is actually an acronym which derives from the term ‘Guaranteed Asset Protection’ and it’s designed to guarantee the true value of your vehicle (aka – asset) in case of a total loss.
Let’s start at the beginning.
When you drive a new car off the sales forecourt its value plummets, sometimes by as much as 40%. Within the first few months of owning the car it drops again, leaving you owning a relatively new car with a much lower sales value than anticipated.
In the unfortunate circumstance that you get in an accident and your car is written off, or your car is stolen, your insurer typically only pays out the current market value of your car. Because a car’s value declines so rapidly, the market value price tends to be a lot lower than what was originally paid – leaving you with a large amount of debt to pay off on a car you don’t actually have the use of anymore.
It’s important to note though, that Gap Insurance is NOT just for brand new cars.
A common misconception of Gap Insurance is that it is only for new cars. The beauty of Abbey’s Gap Insurance is that it is for all cars, both new and previously owned.
Why is Gap Insurance so useful?
GAP Insurance covers the ‘gap’ (see what we did there) between the original price you paid for the car, and the amount your insurer will pay you at the time of the claim.
It means that you aren’t put in the frustrating situation of having a non-existent car, and a lot of debt to still pay off on it.
But, how do you know Gap Insurance is right for you?
It goes without saying that you should consider Gap Insurance if you are purchasing a car on finance. Unfortunately no one can guarantee that their car is going to stay safe and well on the roads and Gap Insurance offers a unique piece of mind.
You should also consider purchasing Gap Insurance if you are buying a car which will depreciate in value quickly. ‘What Car?’ has tallied up the top ten fastest depreciating cars for 2017 – see their list here.
Are there any circumstances where it isn’t needed?
Gap Insurance might not be needed if you can afford to pay for the ‘gap’ yourself if an accident does occur.
Also, depending on your policy, Gap Insurance might already be included so it’s worth taking a clear look at what you have agreed before committing to another plan.
Another thing to keep in mind is that Gap Insurance is often offered by car dealers, but there is no obligation to take it. You can arrange to buy Gap Insurance after the time of purchase and might get a cheaper price with us.
All things considered, Gap Insurance is a worthy investment in protecting one of your most valuable assets.
Abbey Insurance Brokers
If you have any questions about Gap Insurance, please give one of our expert local advisors a call on 08000 66 55 44. They will explain all of the specifics around Gap Insurance to determine whether it is something you need to invest in.