Gap Insurance?

There are many different websites, blogs and so called gap insurance experts all claiming to have the answer. Pages and pages of information about gap insurance, what it does and how it works some better than others and some which are at best a little confusing.

Gap insurance in fact any insurance is all about risk and how that risk effects you financially.

What is Gap insurance?

What is Gap insurance?

Life insurance is about financially protecting yourself and your loved ones in case of a death. Mobile phone insurance is about protecting your financially against the lose of your mobile phone. Gap insurance is no different. You are simply protecting yourself against your vehicle being written off.

So before you can understand, really understand gap insurance you need to be able to understand what you are covered for by your own fully comprehensive insurance.

You own fully comprehensive insurance will only ever pay you the market value of your vehicle on the day it is written off. The difference between this valuation and the amount you have outstanding on finance, the original invoice price you paid or even in some cases the replacement cost can and often is thousands and thousands of pounds.

Bear in mind that vehicles lose money over time. Sad but true and not a fact that your sales executive will like to openly publicise is that the average vehicle can lose up to 50 % within the first three years alone. Even on a modest vehicle of say £9000 that could mean that you lose as much as £4500 and in some cases a lot more.

So what happens if you vehicle joins the estimated 600,000 other vehicles written off in the UK each year?

So here goes with the easy version.

Gap insurance is an insurance policy which runs along side your own motor insurance and comes into action if and when your vehicle is written off.  It acts almost like a top up insurance, depending upon the level of cover you chose you can chose to protect the difference between your vehicles valuation on the day it is written off and the amount you have outstanding on finance, the invoice price or the inflationary replacement cost.

All other forms and types of gap insurance are based on this simple idea, Gap insurance pays the financial gaps your own motor insurance does not cover easy!

 

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