GAP Insurance, Is It Worth It?

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When purchasing a car, the buyer is often inundated with optional extras and offers of insurance they “simply must have”, and always at an additional cost. Before making a purchase, it is important to know of all the extras available to you – in the case of Gap Car Insurance, it is an essential if you are paying for your car over a fixed period of time.

For example, let’s say you got into a wreck with a car you purchased two years ago, of course you have comprehensive and full collision coverage. Do you think you will receive money to cover the entire cost of the car? Not even close, if you didn’t know the value of vehicles drops considerably in the first few years after a vehicle comes out, within four years a vehicle will drop in value of up to seventy-five percent. So that twenty thousand pound car that you have been making payments on for the last 2 years is likely only worth around 12 thousand pounds now, which means now you have a difference that you are going to have to pay for out of your pocket.

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Therefore, “GAP insurance” is used to cover the difference between the actual value of a car at the time of an accident and how much the buyer still has outstanding on their payments. Using the example above, the GAP insurance policy would cover the 8k.

The residual value issue highlighted above is common amongst all makes and models of cars – whilst some types will hold their residual value better than others, all cars will at some point start to drop in value. Whether this begins over time or at the point the car is driven off the forecourt, the need to purchase a GAP insurance policy should always be at the forefront of a purchaser’s mind.

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An important thing to remember is that to obtain ‘Gap’ insurance you have to make the decision to get it as soon as you get a new car loan, it’s a one shot deal. If you don’t get the ‘Gap’ insurance with your new car loan you won’t ever be eligible to get ‘Gap’ insurance coverage on your vehicle and you could end up having to pay a large sum of money because of an accident.

GAP Insurance, Is It Worth It? image 3 supply Vehicle Replacement Insurance – This product will cover the difference between your motor insurers settlement figure and the cost of buying a brand new vehicle, equivalent to the vehicle you had before. Get a quote and buy online now!

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