If you have recently purchased a new car then you should seriously consider purchasing GAP insurance. This is an optional insurance policy which covers the shortfall between the insurer’s payout and the original amount paid or amount outstanding on the finance agreement if the vehicle were to be written off. Due to depreciation (which is much faster when a car is new), this could be thousands of pounds as the insurer will only pay the current market value for the vehicle.
New cars depreciate by as much as 35% after just one year of ownershipand as much as 60% after just three years. This means that if you paid £25,000 for a new vehicle but were to write it off after one year of ownership then your comprehensive insurance provider would pay out roughly £11,250 – leaving you out of pocket by £13,750.
GAP insurance is a smart purchase because accidents happen all the time on the roads and it is easy to write off a vehicle even if the crash is not your fault. Studies also show that drivers are 21% more likely to be in a crashwhen driving a new car. The main reason for this is unfamiliarity with the vehicle as it can take a while to get used to a new automobile. Most of these accidents are minor scrapes and collisions but they could also be high impact collisions which could result in a write off.
In addition to this, criminals are more likely to target a newer car as it has higher value and it is more enticing. Vehicles are written off when they are stolen and never recovered or damaged by fire so a GAP insurance policy will protect you in these incidents too.
It is always best to obtain your GAP insurance from a specialist, such as ALA GAP insurance. You can often purchase GAP insurance from a dealership but you do not get the best deals and the cover is usually not particularly flexible. With a specialist you can get flexible cover, the best deals and fewer exclusions. You may also benefit from extras, such as a vehicle replacement service.
GAP insurance is a smart purchase for all motorists but particularly if you have recently purchased a new car because you stand to lose more and you could be higher risk. Nobody expects to have their vehicle written off but accidents occur far too frequently and these can be costly even if it is not your fault. Not only this but car crime is also on the rise in the UK and many of these automobiles are never recovered. GAP insurance can protect your investment, cover any shortfall and provide peace of mind knowing that you are fully protected.
For tips and advice on car finance read this car financing guide written by lendingexpert.co.uk.