There is one type of insurance which often people either do not know about or have misconceptions about – GAP insurance. It is important that every motorist is aware of GAP insurance and what it can provide because it is a smart type of cover to have which could end up saving you thousands of pounds if your vehicle is ever written off or stolen.
What is GAP Insurance?
GAP insurance is an optional type of cover which provides cover between the amount that your comprehensive insurance provider pays out in the event of a write off and the amount outstanding on the finance agreement or the amount that you paid for the vehicle. The insurer will only pay out what the current market value of the car is and, due to depreciation, this could leave you significantly out of pocket.
When is it Needed?
It is always worth considering GAP insurance because it is a valuable type of insurance, but there are a few times where it is particularly important. These include:
- When you have borrowed a large amount to buy a vehicle
- Your vehicle depreciates quickly
- The vehicle is on a long-term lease
Where You Can Buy it From
You are likely to be offered GAP insurance when you purchase an automobile from a dealership, but you are much better off buying it online from a specialist like Direct GAP. You can usually find the best deals online as it is sold directly by insurers, plus you usually get more flexibility and fewer exclusions.
Types of GAP Insurance
There are a few different types of GAP insurance to be aware of and it is important to know the difference so that you can find the best level of cover for your needs.
Return to invoice – Covers the shortfall between the payout from your insurance company and the amount paid for the car.
Vehicle replacement – Covers the amount between the payout and the cost of replacing the vehicle with a brand new one.
Return to Value – Pays the difference between the settlement and the value of the vehicle when first purchased.
Lease – Pays the rest of a lease contract and any fees incurred for cancelling the agreement early.
How to Pay
Typically when you buy GAP insurance online you can either pay for a year upfront in one payment or you can arrange 12 monthly instalments.
Overall, GAP insurance is an intelligent form of cover which every motorist needs to consider because it could save you a fortune if your vehicle is ever written off.