Gap Insurance – a useful addition to your motor insurance!
Most of us think that comprehensive motor insurance will provide all the protection and cover we need in the event that our vehicle is written off due to theft or an accident. In actual fact, the vast majority of car insurance policies aren’t as comprehensive as we think because they don’t cover the cost of depreciation.
When a vehicle is written off after an accident or theft, most motor insurance policies will only cover the vehicle’s current market value, at the time of the claim. If you have purchased your car using a personal loan, or a car finance package from your dealer, you will most likely be in negative equity until you have paid off a good chunk of your loan! Even if you have paid cash for your car, in the event of an insurance write-off, your motor insurance settlement will be less than the purchase price of your vehicle. Take a look at the What Car Depreciation Calculator and see for yourself how much your car is depreciating!
Protecting your investment by taking out fully comprehensive car insurance may not cover you against the motorist’s biggest expense – car depreciation!
Gap insurance provides cover against depreciation in the event that your vehicle is written off after an accident, theft, or fire.
Compare RTI Gap Insurance
| Insurance Provider | Logo | Policy Cost 3yr/£5000 Claim Limit | Policy Cost 3yr/£10000 Claim Limit | Policy Cost 3yr/£20000 Claim Limit | Cover Period | Max Vehicle Age at Policy Start | Private or Dealer Sale | Policy Purchase Timeframe | Pays First £250 Insurance Excess | Rating | Read Review | Get a Quote |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ALA.co.uk |  | £74.00 | £80.00 | N/A | 1 to 4 years | 10 years | Private or Dealer | Up to 180 days after delivery |  |  | Read Review |  |
| Click4Gap.co.uk |  | £87.00 | £89.00 | £90.00 | 1 to 4 years | 7 years | Private or Dealer | 3 months to 7 years (after purchase) | Only if extra premium paid |  | Read Review | |
Compare Vehicle Replacement Gap Insurance
| Insurance Provider | Logo | Policy Cost 3yr/£5000 Claim Limit | Policy Cost 3yr/£10000 Claim Limit | Policy Cost 3yr/£20000 Claim Limit | Cover Period | Max Vehicle Age at Policy Start | Private or Dealer Sale | Policy Purchase Timeframe | Pays First £250 Insurance Excess | Rating | Read Review | Get a Quote |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ALA.co.uk | | £99.00 | £119.00 | N/A | 1 to 4 years | 10 years | Dealer Only | Up to 180 days after delivery | | | Read Review | |
| Click4Gap.co.uk | | £147.00 | £149.00 | £150.00 | 1 to 3 years | Cars up to 3 months old | Private or Dealer | Up to 3 months after delivery | Only if extra premium paid | | Read Review | |
Compare Basic Gap Insurance
| Insurance Provider | Logo | Policy Cost 3yr/£5000 Claim Limit | Policy Cost 3yr/£10000 Claim Limit | Policy Cost 3yr/£20000 Claim Limit | Cover Period | Max Vehicle Age at Policy Start | Private or Dealer Sale | Policy Purchase Timeframe | Pays First £250 Insurance Excess | Rating | Read Review | Get a Quote |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Click4Gap.co.uk | | £87.00 | £89.00 | £90.00 | 1 to 4 years | 7 years | Private or Dealer | 3 months to 7 years (after purchase) | Only if extra premium paid | | Read Review | |
| ALA.co.uk | | N/A | N/A | N/A | 1 to 3 years | 7 years | Private or Dealer | After 180 days | | | Read Review | |
Gap insurance and negative equity!
With the recent rise in VAT on new cars, the level of new car depreciation has risen substantially to a point where the average family saloon depreciates by an average of 40% during the first year of motoring.
Plunging car prices are leaving thousands of motorists in ‘negative equity’ on their vehicle loans. Many predicted future values on which car finance deals are based, are well above what the vehicle is now worth. This means that many car buyers are in the same position as those whose mortgages are bigger than the value of their home!
Before you take out a car on finance consider what the financial position could be in the event of an insurance write off claim. For example, you take out a 5 year loan from the dealer to buy your car. Work out what you think the finance settlement will be using this finance settlement calculator in 2 year’s time and ask yourself if the value of the car after two years of depreciation will cover the finance settlement? The answer to that question will go a long way to deciding if you need gap insurance in order to cover any negative equity. Don’t forget, the financial liability is all yours, no matter what the gap is between the settlement amount and the insurer’s valuation.
Why you may need gap insurance if your car has an airbag!
Most insurance write-offs are due to accidental damage, which can occur at any time. Insurance companies are now writing off more and more vehicles due to the high cost of repairs. In many cases, the cost of repairing panels and paintwork is not the only factor that insurance companies take in to consideration when assessing claims.
The simple fact that a cars airbag system has activated is now resulting in many insurance companies writing the car off due to the high cost of repair associated with the replacement of a cars airbag systems, particularly as many vehicles now have multiple airbag protection in the side and rear of the vehicle.
Will you ever need Gap Car Insurance?
Here are some facts to consider:-
- Over 200,000 cars are stolen every year and only 60% are ever recovered and returned to their owners.
- Around 500,000 cars each year are involved in serious accidents and damaged beyond economical repair.
- Insurance Companies are writing off more cars than ever due to the high cost of repairs and materials used in modern motor manufacturing.
- UK car crime is now a third of all crime.
- A vehicle is stolen every minute in the UK and a third never recovered.
- Your motor insurance company will value your car at the time of the claim and the resultant settlement offer will always be less than the price you paid for your car.
- Cars depreciate the moment that you drive them away from the forecourt.
- Cars depreciate every month and can lose over 60% of their value over a three year period.
- When a write off occurs you are responsible for any financial shortfall.