This time of year, many of us are looking to buy a new car with a brand new registration plate. Amid the laborious form filling your dealer may have mentioned GAP insurance. But with all your ‘new car’ costs, you may be wondering, is GAP Insurance worth the money? If this is you or if you’re wondering what GAP Insurance is and what it covers, read on.
GAP Insurance Explained
GAP Insurance or Guaranteed Asset Protection, covers the difference between the value of your car (normally protected by your comprehensive car insurance policy) and either the amount you paid for the car or the value of any outstanding payments on your vehicle finance contract.
GAP Insurance covers both new and used cars under eight years old. And it’s not just for cars, GAP Insurance can also cover vans, HGV’s, mini buses, electric vehicles, motor cycles / scooters, motor homes and agricultural vehicles.
So, if your car is stolen or written off, your GAP Insurance will pay the ‘gap’ between what you paid for it and what it’s now worth – the difference may be considerable, particularly if the car was brand new when you bought it.
Conversely, if it’s just protected by comprehensive car insurance, your insurer will only pay out what it’s worth at the time of your claim – which, as explained above is probably considerably less than what you paid for it.
Do you need GAP Insurance if you have full coverage?
When you consider all the costs of purchase and your fully comprehensive car insurance policy, you may, understandably, be asking if you really need GAP Insurance as well.
In answering this question, you may want to consider how much you paid for the vehicle when you bought it and whether it was brand new, how long your vehicle finance contract will last and whether you’d be able to afford to replace your car on a new-for-old basis if anything happened to it. Because if your car is stolen and never recovered, or written off, you’re still contractually bound to keep paying the finance agreement even though you no longer have the vehicle.
There are instances when GAP Insurance might not be necessary. For example, during the first 12 months of ownership, a brand new car replacement is covered in most fully comprehensive car insurance policies, as long as you’re the first registered owner. And, if it’s purchased by a finance agreement, you may already be covered for the difference between the car value and the purchase price. So do read the terms and conditions and be careful to avoid paying for cover you don’t need.
Check out our ‘What Is GAP Insurance’ blog post for more detail on this.
Shop Around For GAP Insurance
Is GAP Insurance worth it? If it brings you peace of mind it may well be a good option for you. However, we recommend that you don’t simply buy what you’re offered by your dealer. As with any purchase, it’s always a good idea to shop around.
There are many different products available and it’s not always clear which is the most appropriate for your unique needs. Because the cheapest price doesn’t necessarily give you the cover you need, it’s recommended that you seek help from experts like ourselves.
Chris in our Personal Lines team knows the market well and can review what you’ve been offered to see if it’s adequate for your needs. There’s no obligation, it’s just a simple call to chat things through. And by the way, our prices may surprise you.
If you, like so many, are fed up of searching for car insurance online, let us quote on that too – we work with all the major insurers and again, we can sort it for you in one simple phone call.