It is no secret that motoring is incredibly expensive when you factor in all of the various running costs, such as insurance, road tax and fuel. It is understandable that motorists will try to make savings where possible, but it is important to understand areas in which it is worth spending money. GAP insurance is a type of insurance policy which splits motorists’ opinion but is actually a smart area to spend money on.
What is GAP Insurance?
GAP insurance is an optional insurance policy that will cover the shortfall between the insurance payout in the event of a write-off and the amount originally paid or the amount outstanding on a finance agreement. Due to depreciation, this could leave you thousands of pounds out of pocket and it could make it challenging to afford a suitable replacement vehicle.
Why It is Worth Considering
Some motorists claim that GAP insurance is not worth it because they will never have their car written off, but this is dangerous thinking. Accidents occur frequently on the roads and this could be an accident that is not your fault but could still end up in a write-off. Not only this, but cars are written off when they are stolen and never recovered and car theft is a huge problem in this country. The stress and potential trauma of having a car written off is hard to deal with but this will be amplified drastically if you also lose out financially.
Additionally, if you arranged a finance agreement for an automobile then you do not want to have to make payments on a vehicle that no longer exists while having to find a way to finance the purchase/lease of another vehicle. GAP insurance is not a requirement but it is a sensible type of cover which could end up saving you a fortune. It is particularly worthwhile if you purchased a new vehicle because the rate of depreciation is much higher - a new car loses as much as 35% of its value in the first year alone. This means that if you bought a car for £20,000 and it was written off after a year then you would receive around £13,000 from your comprehensive car insurance leaving you out of pocket by £7,000.
Overall, GAP insurance is worth the money and it could end up saving you thousands of pounds. It can also provide peace of mind knowing that you are protected if your car is ever written off.
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© Neil Buckland 2019