Do you have gap insurance for your car? If not, you might find yourself significantly out of pocket if you ever get into an accident and the car is written off. Despite its importance, many motorists are unaware of gap insurance and why it is so important. This post will tell you all that you need to know about gap insurance (guaranteed asset protection).
What is Gap Insurance?
If your car were to be written off or stolen and never recovered, you will find that a comprehensive insurance policy would only pay out what the vehicle is worth at the time. Due to depreciation, this means that you will be substantially less than what you paid for it, particularly if it was a new car. Gap insurance will bridge the gap between the payout and the amount originally paid so that you can afford a replacement.
Do You Need Gap Insurance?
Gap insurance is an optional policy but it makes a lot of sense in a few cases. If you have purchased a new car, gap insurance is smart because new cars lose around a third of their value after just one year. Gap insurance is also useful if you have purchased a car on finance as they will pay the outstanding finance, which means that you are not paying for a car that no longer exists.
Pros of Gap Insurance
The main advantage of gap insurance is that it offers financial protection and could save you thousands of pounds. It is also beneficial for owners that owe more than what the car is worth as you are likely to owe more than what you would receive from a payout. You will also find that having gap insurance in place can provide a level of peace of mind that is hugely important. The roads can be dangerous and accidents occur all the time. Additionally, car theft is a major and growing issue in the UK and gap insurance can protect you from this.
Is Gap Insurance Worth it?
So, is gap insurance worth it? Generally, it is recommended that you take out gap insurance if you have purchased a new car or put down a deposit of less than 20% (at least for a few years until you own less than what the car is worth). It is always worth considering as a motorist as it can provide finical protection and peace of mind.
Hopefully, this post will help and allow you to decide whether or not gap insurance is right for you.