The Impact of Vehicle Depreciation
After you purchase a vehicle, directly after you drive it out of the dealer’s showroom or off the car lot, the vehicle begins to deteriorate in value. The most value is lost during the first year or two, with up to 60% being lost by the end of year three. Should you be unlucky enough to lose your vehicle in an accident where it’s written-off, or due to theft, you will most likely find that your comprehensive motor insurance broker will only pay out the devalued amount, leaving you with outstanding debt to the finance company. Guaranteed asset protection will pay out the difference, or gap, between the two, leaving you debt free.
The reason you need motor gap insurance is mainly because of crime, especially vehicle crime, which is an ever present reality. One often hears of people’s cars being stolen or even written off after having vehicle accidents without being able to replace the vehicle with one of similar value. This is due to the fact that at the time of your accident or car theft, you are only entitled to the current market value of your vehicle, no matter the original price you paid for the car.
Motor gap policies cover and protect you in the event of car theft, or an insurance write-off after a major accident. A gap policy however, will cover the difference between the depreciated insurance pay out and what you originally paid for the vehicle, which can sometimes be an extremely large difference due to car depreciation.
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Gap insurance policies are designed as an additional cover in the event that your vehicle is stolen or classified as a write-off in an accident. This type of policy will pay out the difference between the depreciated amount from your comprehensive motor insurance, value of vehicle before the incident, and the price you originally paid for the vehicle.
The motor gap insurance provides you with value for money. As an example: if your car is stolen or written off within eighteen months, and your purchase price was £10,000, your insurance may have depreciated the vehicle already by as much as £3,000, therefore your gap insurance will pay out £3,000.
Almost everyone is eligible for motor gap insurance. Anyone that purchases a new vehicle, that’s registered in the United Kingdom, even if it’s second-hand, can be covered, and right up until the vehicle reaches 7 years of age.
You benefit from this type of broad protection insurance when your vehicle is either stolen or declared a write off from your comprehensive motor insurance company, what the insurance company will pay out the depreciated value for the vehicle at the time of the write off, which could end up being far less than what you originally paid for the vehicle.
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Do You Need Gap Insurance?
If you purchase or lease a new or nearly-new vehicle (up to four years old), this is the period of time your car depreciates the fastest. During this time you should seriously consider Gap Insurance.
Choosing The Right Gap Insurance For Your Car
Whichever method you choose to pay, there is a GAP insurance policy that is right for your vehicle, personal circumstances and financial position. GAP insurance is available for new and used cars.
If you paid cash for your vehicle, or paid a sizeable deposit, or if you financed it, Combined RTI Gap cover will pay out the shortfall between the cost of your vehicle and the market value at the point of claim, which is the amount your motor insurer will cover. This is cover that will protect you no matter if you use your vehicle for private use or for business.
If you leased your vehicle or it is under a contract hire agreement, Lease/Contract Hire Gap Insurance will cover you for the shortfall on your lease agreement, after your motor insurer settlement. If, for any reason, you change your vehicle within the first 90 days from the start date, we will also arrange to transfer your cover to your new vehicle without hassle or charge.
Can you pay Gap Insurance monthly?
If you’re looking for the convenience and affordability of a monthly payment option, Click4Gap offers you a non-financed agreement that enables you to pay a 20% deposit on purchase, followed by nine monthly instalments to cover the balance.
You won’t be signed up to a credit agreement, we’ll require no credit references or searches, and it isn’t subject to any changes in interest rates. For more on paying monthly for Gap Insurance click here.
Contact Click4Gap Today!
Looking to take out GAP insurance? We are here to help. Hop on our Live Chat, call us any time Monday to Friday, 9am to 5pm on 0208 819 3424, or Email us and we’ll get back to you during office hours.
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