Whether you are a new driver or a more experienced one getting the right insurance at a decent price is important for all. Gap insurance is something that all drivers should consider to make sure they are as protected as they can be.
4 Tips on How Gap Insurance Works UK?
- The Financial Risk Of Depreciation
- Bridging The Gap
- Coverage And Benefits
- Where To Get Gap Insurance In The UK
The Financial Risk Of Depreciation
Unfortunately, vehicles rapidly decrease in value once they are purchased and driven. Therefore, if you were to sell it now, there would be some gap between what you paid the vendor and the current market value. Factors such as mileage, previous owners, warranties and services and brand or model desirability will all have an impact on the value of your car. You can always use an online calculator to work out the depreciation value of your car.
If you were to have an accident and your vehicle was written off, your standard insurers will give you the current market value of your car which means you could be out of pocket if your car was brand new.
Bridging The Gap
Gap insurance is there to help bridge the financial gap between what your insurers will pay and the original price you paid a dealership. This is especially important if you would still have money remaining on a loan you took out for the car.
Having protection against unexpected expenses and financial losses, such as if you were to have an accident, is helpful for keeping yourself afloat and not having the stress of being out of pocket.
Coverage And Benefits
There are three main types of gap insurance, and they each have different benefits depending on your situation.
‘Back to invoice’ insurance is where you are paid the difference between what your insurer will pay in the event that your car is stolen or written off, and the original amount you paid or the amount you owe to a finance company.
Another type is ‘vehicle replacement’ gap insurance. This is where you will be paid the difference between the insurance payout and what you would pay if you were to buy the same car brand new today. If you originally bought a used car, this type of insurance will bump you up to how much you paid for it at the time.
The final type of gap insurance is ‘contract gap’ insurance. It is worth noting that this is only available for people who have leased their car with no option to buy it. The gap insurance will pay any outstanding payments owed on the lease.
Where To Get Gap Insurance In The UK
As with any form of insurance, it is important that you choose a reliable and trustworthy company. To be a savvy shopper, it is worth comparing different quotes to find a reasonable price with all the protection you need.
If you get a good quote online but the company isn’t your top choice, you could always phone your preferred company and see if they can lower their price or even match the cheaper quote.
