If you purchased your new car in September, then time is ticking away for you to be able to insure it with gap insurance.
This is because to qualify for the higher levels you must have taken delivery of your car within 180 days. Some dealerships will only offer you gap insurance from the day you take delivery, some online brokers may give you up to 90 days, though we can allow 180.
Maybe you have no idea what gap insurance is, you may have heard someone talking about it and would like to know a little more before your 180 days is up.
Unbeknownst to many people, if you were to be involved in an accident in which your car was written off, or your car was stolen, your motor insurance would only award you with the sum of money your car was worth at the time. You may believe that your car’s value will not depreciate and it may be a hard fact to swallow but every car deprecates from the minute you drive away from the showroom in. For example, if you buy a Ford Ka for £9,725 , within one year it would have depreciated to £6,190, in it’s second year £5,069, in the third year £4,101 and £3,286.
So, if you have a crash, or your car is stolen, two years after you purchase it (looking at the example) your motor insurer will only award you £5,069, meaning you will be £4656 out of pocket. This is where gap insurance comes in. Gap insurance sits on top of your motor insurance and depending on which type you choose, will either pay your outstanding finance (Finance/Contract hire gap insurance), pay the remaining amount to top you back up to the amount you paid (Return to invoice gap insurance) or award you with the amount necessary to buy the exact same standard of vehicle again, mileage, age etc (Vehicle Replacement Gap Insurance).
Finance Gap insurance, if your car is written off or stolen, your finance company will still expect your remaining finance to be paid off, this may be a significant amount more than what your motor insurance awards and therefore without gap insurance, you will find yourself without a car and with a significant sum to pay.
Return to invoice gap insurance, if your car is written off or stolen, will sit on top of your motor insurance, awarding you with the amount necessary to get you back to square one, the amount you paid for your vehicle. Therefore you can pay any excess payments or costs you see fit and look to organising a new vehicle and ensuring that you have not lost out on any money.
Vehicle replacement gap insurance, if your car is written off or stolen, along with your motor insurance, will award you with the amount necessary to be able to buy the exact same car again. Brand new versions of cars appreciate over the years and you could find your car costing a significant amount more than you paid for it. Also, this is the perfect gap insurance if your vehicle is acquired through some sort of promotional offer. Vehicle replacement gap insurance will ensure that you have the exact amount of money to be able to buy the exact same standard of vehicle again, age, mileage etc.
Gap insurance is literally the only way to look after your vehicle investment fully. With gap insurance, you can rest assured that if the worst does happen and your car is written off or stolen, that you are completely financially sound. You will not have the added pressure, after getting over an accident or a theft, or having to acquire a new vehicle, or to settle any outstanding finances.