What a car is worth is a matter of opinion. Car dealers exist, of course, to make money; and their big shiny showrooms have to be paid for somehow. On the other hand, a very similar car to the one that's sat in pride of place at that showroom might be bought for considerably less at an auction, or online. So, which price will an insurance company take into consideration when working how much to pay out on a total loss? Yes, you've guessed it right.
What is this GAP insurance I've heard so much about?
GAP insurance is a type of policy that is becoming increasingly popular in the UK. This insurance coverage can be incredibly useful for car owners who have recently purchased a new car and want to protect themselves from the financial risk of theft or damage.
Whilst every policy is of course different, GAP insurance coiuld cover the difference between the value of a car at the time of loss (ie it's market value) and the amount still owed on the vehicle. For example, if a car is considered, by it's insurers, to be worth £15,000, but the owner still owes £20,000 on it, the GAP insurance policy could pay out the £5,000 difference in case of theft or write-off. Alternatively, the owner may be able to replace it with a similar car, bought from from a reputable dealer, even if the insurer values a written off vehicle at less than that car would actually cost.
Is GAP worth having?
One of the key benefits of GAP insurance is the peace of mind that it provides to car owners. With this cover in place, they can drive their vehicles without worrying about the financial impact of a potential loss. Additionally, this insurance might be a money saver in the long run. If a car is written off or stolen, the insurance company will typically only pay out the market value of the car, which may not be enough to cover the outstanding finance. In this case, GAP insurance steps in and covers the difference, ensuring that the car owner is not left with a hefty bill.
Are there drawbacks to it?
Despite the many benefits of GAP insurance, there are also some drawbacks to consider. The cost of the policy can vary depending on the provider and the level of cover chosen. Some policies may end up costing hundreds of pounds, which can be a significant financial burden for some car owners. Additionally, not everyone may need this type of insurance. For example, if a car is fully paid for, getting on in years and overdue for replacement, GAP insurance may not be thought necessary.
It's also worth noting that some people are sceptical of GAP insurance and argue that it's just another way for insurance companies to make money. Whilst it's true that some insurance providers may be more interested in their bottom line than their customers' best interests (yes I'm a cynic but it does happen), it's important that, if you feel it's suitable for you, you do your research and choose a reputable provider with a good track record.
In conclusion, whilst GAP insurance is not for everyone, it can provide valuable protection for those who are worried about the financial impact of a car theft or write-off. It's important, though, to weigh the benefits against the potential costs before making a decision. Additionally, it's always a good idea to shop around and compare policies to find the best deal.
Ultimately, the decision to invest in GAP insurance should be based on your individual needs and circumstances; and not (expensive) advertising.
