Even careful drivers need a backup plan - how GAP insurance can help

Even careful drivers need a backup plan - how GAP insurance can help

If you take pride in your car and look after it by driving it carefully and carrying out regular maintenance and cleaning tasks to keep it looking smart, it can be really frustrating when it sustains some sort of accidental damage. You might even be unfortunate enough to suffer a collision through no fault of your own. This might mean that you face a repair bill or you may even need a replacement vehicle.

Claiming on your insurance isn’t always straightforward and you might find that some damage isn’t covered or there is a shortfall between the value of your car, the cost of the damage, and what your insurer will pay you.

That is where Guaranteed Asset Protection (GAP) insurance comes in. It is important to understand that even if you have fully comprehensive insurance, there is still a potential scenario where you could lose money if your car is written off and the insurance company offers you less than you owe to the finance company.

New cars can often suffer from a level of depreciation that means their value quickly falls below the price you paid for them. GAP insurance is there to cover that shortfall and lets you enjoy the same standard of motoring as before by not suffering financially when you have to replace your car after it is written off.

 

"The GAP insurance UK market is growing and it offers drivers who care about looking after their vehicle and don’t want to be left out of pocket the chance to insure against the sort of issues that basic insurance products don’t cover."

 

More to GAP insurance than you might think

Although GAP insurance has now become popular with savvy motorists, it is not a product that everyone knows about, especially some of the additional options that you can purchase.

However, you will be glad that you took the time to find out more when you discover that you are able to claim for problems such as damage to your alloy wheels, scratches and dents, and even the cost of replacement tyres.

How does GAP insurance work?

The GAP insurance UK market is growing and it offers drivers who care about looking after their vehicle and don’t want to be left out of pocket the chance to insure against the sort of issues that basic insurance products don’t cover.

There are three key GAP insurance products that you may have been offered when you arranged to buy your car through a dealer, as well as other types of GAP insurance products that are well worth finding out about.

Finance or contract hire GAP insurance is designed to ensure that you don’t suffer a shortfall if your motor insurer offers you a settlement figure, after making a claim, that is less than the amount you owe to the finance company. When you take out this type of GAP insurance, it means you will be paid the difference between the amount offered by your insurer and the settlement figure required by the finance company.

A slight deviation on that product is Return to Invoice GAP insurance. This pays you the difference between the settlement figure offered by your insurer and the purchase price paid for the vehicle.

Vehicle Replacement GAP insurance is another popular option. This product is designed to pay the difference between the settlement offered by your insurance company and the cost of obtaining a replacement vehicle that matches the same specification.

Other options available

In addition to these mainstream insurance products, there are also some other options that are definitely worth considering if you are someone who wants to ensure that your car is looked after and you are not left out of pocket when something happens to it.

Tyre insurance - This covers the cost of replacement tyres if you suffer accidental or malicious damage. You can claim for up to 4 tyres per year and up to £300 per tyre.

Scratch and Dent insurance - This covers the cost of chips and scratches and scuffed bumpers. The cost of parts and labour are covered when you suffer accidental damage to the bodywork of your car.

Alloy Wheel insurance - This covers the cost of repairing accidental damage to your alloy wheels if you buy this product in conjunction with GAP insurance.

Is it good value for money?

When you consider what you can cover with GAP insurance products, you may well consider it good value when you are able to make a claim and you are able to repair or replace your car to the same standard as before.

A new car can lose up to 60% of its value in the first three years and that could leave you vulnerable to a short payout from your insurer without the backup of GAP insurance.

If you have a so-called balloon payment, that means you have to pay a large sum at the end of the finance deal and you could also struggle to cover this figure without the security of GAP insurance.

If you have your car on contract hire, you could end up owing more money to the finance company than your insurer is willing to pay, unless you have GAP insurance.

In answer to the question, GAP insurance products could turn out to be good value for money when you consider how it could help you to enjoy protection from a financial loss and even accidental damage to your tyres and bodywork.

Get in touch now to find out more about the range of GAP insurance products we offer.

James Cartwright

James Cartwright

James is an innovator in the Gap Insurance market with a longstanding understanding of automotive and Gap Insurance and consumer trends. In authoring these articles he brings together over 20 years of industry experience and a lifetime as an automotive enthusiast.

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