Many families are currently driving around unaware that they could take an enormous financial hit if they were to be in an accident that resulted in the car being written off. In this situation, a comprehensive insurance policy would only pay the current market value for the car, which could leave them out of pocket by thousands as a result of depreciation.
Protect Yourself Against Depreciation
Fortunately, there is a solution to this in the form of GAP insurance. This is an optional policy that will cover the shortfall between what you owe on the car/amount originally paid and the current market value. Depreciation can be as much as 35% after one year and over 50% after three, so this is a significant amount that you would be short without a gap insurance policy in place.
As an example, if you owe £15,000 on your vehicle when it is written off but your insurer only values it at £11,000, GAP insurance would bridge the £4,000 gap so that you do not have debt on a car that you no longer can use and can afford a replacement.
Do I Need it?
Many people will claim that gap insurance is not worth it, but accidents are highly common and these can often result in a write off. Even if you do nothing wrong and you are a smart, safe driver, you could easily be involved in an accident that was not your fault and have the car written off.
In addition to this, a car is deemed a write off if it is stolen and never recovered. Unfortunately, car crime is a major issue in the UK and not everyone has the luxury of being able to park somewhere private and secure.
Peace of Mind
GAP insurance is optional, but it is a sensible form of cover that will provide protection as well as give you important peace of mind. It is worth considering by any motorist, but particularly for those that have taken out a large loan to buy the vehicle and/or those that buy new when the depreciation rate is at its highest.
Finding Cover
As with most types of insurance, you should always shop around and research your different options to get the right level of cover for your needs. GAP insurance is available from dealerships, but you might find it best to get a policy from a specialist for the best level of cover.
GAP insurance can save motorists thousands of pounds and ensure that they are not left struggling to replace a car if it is written off. While it is hoped that you won’t be in an accident or have your car stolen, it is better to be safe than sorry and you will find that having the cover in place will provide peace of mind.
