Why do Most people buy just 3 years Gap insurance?

Why Buy Just 3 Years Gap insurance?

Did you know that most people only buy a three year gap insurance policy?

Strange when you consider that we are all now keeping our vehicles longer with the average length of ownership just over sixty three months. So why is this?

The answer we think is that in most cases the general public are offered gap insurance directly from their main dealership. As gap insurance is not their field of expertise and is instead simply an added revenue source this means that the type of policy they can provide is normally a generic three year, which is traditionally a form of return to invoice.

As we already know gap insurance is a massive profit opportunity for dealerships so as they can in most cases only offer one form they highlight its merits. Almost a one size fits all mentality.

This means that when customers start to compare gap insurance on-line they are under the impression that it can only be for a maximum of three years, after all that is what the dealership offered so it must be correct?

Well in short no!

In fact you can buy policies for up to five years, or a four year deferred style of cover.

So why would you need to think about protecting your vehicle for up to five years?

Again we already know that your vehicle will depreciate its most within the first three years, in fact it will lose up to fifty percent of its original value. That said although the initial rate of depreciation may slow down in the following years it does not stop and your vehicle will continue to lose value year on year.

If you have a vehicle and it is written off in four years eleven months and twenty eight days time surly this is when you would have the biggest shortfall to find?

Yes you could buy another form of gap insurance at the end of your dealerships three year policy but instead of protecting the invoice or replacement cost your vehicle would now be revalued at what ever that valuation is would be the only price that would be protected.

So in summary, if you are buying a vehicle you need to be aware and consider extending your gap insurance cover after all it would be heart braking if your vehicle was written off towards the end of the fourth year when your dealerships policy had expired.

 

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