Compare Cheap Gap Insurance
When you’ve splashed your cash on a new motor it becomes your pride and joy, so having an accident which writes off your shiny new wheels would be a devastating loss financially and emotionally.
Most fully comprehensive car insurance policies only offer ‘new car replacement’ during the first 12 months of ownership, so if your car is involved in an accident or stolen after this period, your insurance payout is likely to leave you out of pocket. Fear not, there is a fail-safe option to protect your investment called GAP insurance.
What is GAP Insurance?
Gap Insurance stands for: Guaranteed Asset Protection or Guaranteed Auto Protection. What this essentially means is that your insurer will offer to pay out the difference in value between the motor insurer’s settlement and the price that you paid to purchase your vehicle.
Before purchasing this supplementary form of insurance, it is important to understand that all vehicles depreciate in value over time, thus your chosen insurer may only pay out the value of your vehicle on the day it is written off, and not necessarily the large amounts of cash you initially forked out for it, albeit one week or even 2 years after purchase.
Why choose GAP insurance?
GAP insurance can be a saviour to those of you who have a contract hire deal, if you have signed up to a long-term rental package for a vehicle with a mileage allowance. If you were to have an accident, you could be left without a car and still owing thousands in outstanding finance.
In the event of your vehicle being declared a write off, some GAP insurance brokers will pay the difference between your motor insurers settlement and the cost of a replacement vehicle matching the original vehicle specification, meaning you won’t be in a situation where you have no transport at all.
What if I bought my new car under a financial agreement I hear you ask? Well fear not as GAP insurance can still be a viable option for you. If you purchased your vehicle under a finance agreement (except where the policy is transferred) and the outstanding balance on the financial agreement when your vehicle is written off exceeds the original purchase price, this insurance will pay the difference between the vehicle value at the point of total loss and the outstanding finance balance.
Finally, motorists can have some peace of mind that most GAP insurance policies are paid for up front, and for that reason, you are eligible for a refund if you decide to sell or refinance your vehicle.