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Gap Insurance for new vehicles
Why Gap Insurance is Essential for New Vehicle Owners
So, you’ve purchased a brand-new vehicle and are ready to start your chapter as a new vehicle owner. What next?
Protecting your new vehicle in the event of a total loss is essential, and the best way to do this is through a Guaranteed Asset Protection (GAP) Insurance policy.
A popular form of protection amongst new vehicle owners, GAP Insurance could save you from considerable financial impact should your new vehicle be written off, especially if you used a finance agreement to help you purchase it.
Read on to learn how you can secure instant peace of mind with GAP Insurance for your new vehicle.
Understanding Gap Insurance
Combined Return to Invoice GAP Insurance covers the difference between the amount your motor insurer pays out after a total loss and the purchase value of your vehicle, or the outstanding balance on your finance agreement, including early settlement penalties.
In the unfortunate event your vehicle is stolen or involved in an accident that results in a total loss, your motor insurer will typically only cover the current market value of the vehicle on the date of the loss, not what you bought it for.
In the case of new vehicles, the payout you’re offered could be substantially less than what you paid for your vehicle. This gap can leave you with a significant financial burden, never mind the cost of finding a replacement vehicle.
Why New Vehicles Need Gap Insurance
New vehicles are a substantial financial commitment. With GAP insurance, you can enjoy your new vehicle with peace of mind knowing you’ve got the cover you need in place.
Here’s a few reasons why GAP Insurance is a must-buy for new vehicles:
- Depreciation – The value of your new vehicle will depreciate rapidly during the first three years of ownership – it’s value could decrease by up to 20% each year. This means that if your car is declared a total loss after three years of ownership, the highest pay-out offered by your motor insurer would be a maximum of only 40% of the purchase price.
- Loan-to-value ratio – If you bought your new vehicle using a finance agreement the loan amount can quickly become more than the vehicle is worth because of depreciation. This problem could impact you even more if you used a small down payment.
- Financial stability – In the event of a total loss, the financial impact can be significant. GAP Insurance helps maintain your financial stability by covering the shortfall between your motor insurer pay-out and the purchase value of the vehicle or the remaining balance on your finance agreement, whichever is greater.
Benefits of Gap Insurance for New Vehicles
- Financial safety net – With rising costs a worry for many, it makes sense to protect yourself from significant financial burdens that could occur in the future.
- Like-for-like replacement vehicle – Without GAP Insurance, you won’t be able to replace your new vehicle with a like-for-like replacement using the payout from your motor insurer. With GAP insurance, you can! It’s as simple as that.
- Peace of mind – Having extra financial protection in place lets you enjoy your new vehicle without the worry of a potential set back.
Why Choose Click4Gap?
- Experience with New Vehicles: You’ll need a provider with a proven track record in covering brand new vehicles. Our experience will ensure an understanding of the unique risks and requirements of your vehicle.
- Coverage Options: We offer flexible coverage options tailored to the needs of new vehicle owners of all types.
- Customer Service: Our excellent customer service record will provide you with responsive and knowledgeable assistance that will be delivered promptly in the event of a claim.
- Reputation: Our reputation in the industry as GAP Insurance experts and our customer testimonials will give you a gauge of our reliability and service quality.
How Gap Insurance Works
Understanding how Gap Insurance works can help you make an informed decision. Here’s a step-by-step overview:
Purchase GAP Insurance: Whether you purchase a new vehicle outright or finance it, you can take out Click4Gap Gap Insurance that will cover your new vehicle.
Total Loss Occurs: If your vehicle is stolen or involved in an accident and deemed a total loss, or it’s stolen and not recovered, your motor insurance will pay out the current market value of the vehicle.
Claiming the Shortfall: Your Click4Gap cover will make up the difference between your motor insurance payout and the purchase value of your vehicle, or the remaining balance on your finance agreement, ensuring you aren’t left with a financial shortfall.
Real-Life Scenario
Imagine you new pride and joy is stolen or involved in a severe accident and is declared a total loss.
covered by your
motor insurer
Possible shortfall amount,
for your account
If you paid £25,000 cash for your car and a year or so later it’s declared a total loss, after your motor insurance pay-out you could have a shortfall of as much as £8,030. If you have Gap Insurance, this shortfall would be covered in total up to an amount of £75,000, subject to the policy terms, plus up to £1,500 for dealer-fitted accessories and £500 towards your motor insurance excess.
Common Misconceptions About Gap Insurance
- Only for Financed Vehicles: Many people believe that GAP Insurance is only necessary when you purchase a new vehicle with finance. However, all new vehicles depreciate in value and could see you facing a large cost to replace your vehicle whether you used cash or a loan to buy it.
- Expensive: Some think GAP Insurance is costly, but it is often quite affordable for new vehicles, especially when considering the financial protection it offers. Shopping online will give you access to the best prices.
- Unnecessary with Motor Insurance: Even with comprehensive motor insurance, you may still have purchased your vehicle for a significant amount more that its current value, or the balance on your finance agreement may be more than the vehicle’s market value on the date of loss. GAP Insurance will cover this difference, providing additional financial security.
Alternatively, for more information on Gap Insurance for new vehicles, call us on 023 921 0626, weekdays during office hours. Our team of experts is waiting to help you find the best coverage for your needs.
If you’re interested in Gap Insurance for other types of vehicles, such as driving school vehicles, taxis, or motorbikes, mopeds, and scooters, we have specialised pages to provide detailed information on these options.
