When it comes to insurance, many motorists assume that their insurance provider will pay out in full if the automobile were to be written off. This is not true, as the insurer will only pay out the current market value of the vehicle. Due to depreciation, which can be as much as 77% over three years, this could leave the motorist seriously out of pocket and unable to afford a new car.
GAP Insurance
Fortunately, there is a solution to this in the form of GAP insurance. GAP insurance is an optional type of policy which will cover the shortfall between the insurance payout and the amount outstanding on the finance agreement or amount that it was originally purchased for. As an example, if you bought a vehicle for £19,000 and it was written off after three years, your comprehensive car insurance would only pay £8,850 leaving a £10,450 gap. GAP insurance will cover this so that you are not left both carless and cashless.
Ouch!!
Write-Offs
It is unfortunate, but accidents occur all the time, and these are often not your fault but could still see the car declared a total loss. Not only this, but vehicles are declared written off when they are stolen and not recovered. Over half a million cares are taken every year in the UK with 33% never being recovered. In addition to protecting your investment in case of these scenarios, this can also provide complete peace of mind which you cannot put a price on (especially if the car you drive is high value!).
Obtaining GAP Insurance
GAP insurance can be obtained from a few different places, but the best place to purchase will always be from a specialist. In addition to having the most comprehensive and flexible levels of cover, specialists also often have the best prices on the market too. Not only this, but you can find brand-specific warranties like a Ford warranty from these specialists as well. Extended warranties are another smart investment if the manufacturer’s one has expired and will ensure that the cost of repairs are covered if you have a mechanical or electrical fault.
Conclusion
Overall, GAP insurance is a smart purchase to make that could save you a considerable sum. Some motorists believe that it is not a necessary purchase, but write-offs happen all too frequently and this could leave you out of pocket and carless without a GAP insurance policy in place.
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