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So you have insured your vehicle in case of an accident, theft or any unforeseen event. But, is that enough? Suppose you make a down payment on a car and after a few months it ends up getting stolen or totaled. Your motor insurance is going to make your settlement payout based on the current market value of the car, and not its actual price. This could leave you with a large outstanding bill to settle with the car dealer. GAP insurance was created to protect you in case you ever find yourself in such a scenario. The purpose of the insurance is to cover the gap between what your insurer pays out, and the balance of your loan or lease for the vehicle.
GAP stands for guaranteed asset protection. This type of insurance has been around for many years. It not only covers cars but also motorcycles. It makes sense to consider this type of protection if you are going to take a finance deal to purchase a car or motorcycle. One of the good things about GAP insurance is that you are eligible for a refund when you completely pay for your car or sell it.
This type of cover is not a replacement for motor insurance. Instead, they complement each other to ensure that your investment in a car is well protected in different circumstances.
The value of cars is not stable. If you buy a brand new car today, its valuation will not be the same three years later. And when your insurer is calculating your payout, it will be based on the current value of the car rather than the price you bought it. There are many factors that affect the value of a vehicle. Usually, the value of most cars does not change very much in the first year when you buy it new. But after three years, the value could depreciate significantly. The state of the vehicle, as well as the model, are some of the things that influence the valuation of a car.
GAP cover is not necessary for everyone. If you can pay outright for a car or you can do so in less than 12 months, taking out extra cover may not be necessary even if you took a loan to make the purchase. An ordinary car insurance will do.
If you buy a brand new car and pay for it in full, getting GAP insurance is more or less redundant. If you were to lose the car, your insurer is going to provide a vehicle for you that is the same brand and condition as the one you lost. However, if you take out a loan to get a car, then you need to consider protecting the gap. This is because if the car gets damaged or totaled, you will not be left with the burden of paying off the remaining amount that you owe from your loan. The chances are that your insurer could deem the value of the vehicle to be much lower than its original price.
Gap insurance can be viewed as three main types as detailed further below. The purpose of each being to make good any loss between what the insurance brokers pays ouy and the actual amount that you paid to purchase the new vehicle.
Gap insurance comes in many forms , the main terms that customer used to find us include:
Usually, you can get GAP cover from your car dealership. There are also licensed brokers like Martin lewis, Gap insurance 123, Total Loss Gap Insurance and others thato deal in this type of cover. Many experts recommend buying this cover direct from brokers rather than a car dealership since the latter tends to be more expensive. Another advantage of buying from a broker is that you are going to get additional information and tips on the right policy to choose.
In 2015, UK authorities introduced new rules governing the sale of GAP insurance. According to the rules, buyers must be provided with all the information they need to make an informed decision on the purchase. Also, sellers must have a 4-day deferral period so that the clients are not coaxed into signing up for the insurance on the same day that it is introduced to them. The rules are necessary because this type of protection had earned a negative reputation over the years due to the fact that many felt they were pushed into buying it. With the latest rules, you can assess the GAP insurance packages being offered to you properly, and even assess prices from different providers to determine if you are getting the best offer.
Some GAP insurance packages like finance Gap insurance are made to help cover the cost of financing the loan for a car. There is a lease GAP insurance policy that is meant to help take care of the fees and other costs that may be incurred from damaging a leased car or having to end a leasing agreement prematurely. There is a vehicle replacement plan that was created to add to the payout from your car policy to replace your vehicle with a new one.
It is important to ensure you understand all the policy details before you sign up for it. Brokers are usually glad to provide more insight on the features of the different packages they have to offer.