Do I Need Gap Insurance?
Car Gap Insurance exists as buffer that protects a car owner against depreciation starting from the date that they purchase a new vehicle. Think of it as a top-up to your motor insurance.
If you buy a new or used car and you take out a comprehensive motor insurance policy then you might be surprised to find that the amount of money that your insurer will pay out typically will be nowhere near the amount that you actually paid for your vehicle in the event of the car being written off as a result of fire, theft or irreparable damage.
This is because comprehensive cover usually only entitles you to the market value of your car at the time of it being declared a total loss. So, if you paid £30,000 for a brand new car and it was involved in a head on collision two or three years later, your standard motor insurer might only provide a settlement worth £14,000 – which is an actual loss of £16,000 as far as the car owner is concerned. Car GAP Insurance is designed to pay the difference between the value of your car at time of the total loss insurance claim and the purchase price of the vehicle.
Related Reading: Click4Gap Ranked #1 On MoneySavingExpert For Gap Insurance
NOTE: There are several different types of Gap insurance, with each one providing specific cover depending on your personal situation and the way you financed your car (purchase or lease).