Gap insurance is a nice way to make your auto insurance policy more protective. But it is essential to have an knowledge of the definition of gap insurance before we dive into whether gap insurance is correct for you.
A Quick Definition
Gap insurance refers to Guaranteed Asset Protection insurance. It is an optional, add-on support that can assist some drivers to cover the "gap" between the sum owed to their vehicle and the actual cash value (ACV) of their vehicle in case of a covered incident where their vehicle is declared a complete loss.
There are many other reasons you might want to offer gap insurance a broad range of berths, including paying out only if you have a extensive car insurance policy, and the fact that it has a shoddy reputation because it has been pressed hard on unsuspecting customers for years.
Gap Insurance Might Be Useful For You In Case:
- You want a brand new car: If you plan on having a brand new car, gap insurance can be considered. For example, if you pay £ 30,000 for a new car and it's written off 15 months later, your insurer will pay £ 18,000 (what's worth at the moment). If you're not pleased with the reduced sum – although that's enough to provide you with a substitute vehicle like that – gap insurance might be worth it.
- You owe money to a car finance business: You may find gap insurance helpful if you have carried out finances to purchase the vehicle. This is because if you've purchased a vehicle this way and it's written off or robbed, even though your vehicle insurer will pay the price it's worth at the moment, you still have to pay off the value it was when you first purchased it.
Now you're going to have to pay back the loan if you crash the vehicle or not. But if you had bought gap cover, the loan would be paid off earlier so you wouldn't be left to pay back the money for a car you don't have anymore or a car you can't drive anymore.