GAP insurance explained
When buying your next motor, you will probably come across the phrase GAP insurance, if you haven’t heard it already. Here’s a guide to what it is and how it works, so you can decide whether or not it is the right addition for you.
GAP insurance is designed to cover the difference between what your insurer will pay in the event of theft or a total write off, against what you originally paid for it or owe on it.
It is designed to act as protection in the event of the worst happening, here’s an example: imagine you pay £15,000 for a car or take out finance to that amount and the car is stolen a week later. Your insurer may then value the car at say, £10,000 and offer you this amount. In this scenario, you will either be £5,000 worse off, or £5,000 in debt, depending on how you funded the car initially.
GAP which stands for Guaranteed Asset Protection, would pay the difference between what you paid or owe and what the insurer values your motor, providing you have a valid agreement in place.
While this kind of agreement has its benefits, it is worth noting that you should consider whether you need to take out GAP insurance on a case by case basis. Some instances when it may come in handy would be; if you have used a large loan to buy the vehicle, you are concerned about the rate of depreciation or if your car is on a long-term lease.
This is a brief overview of GAP insurance but if you would like more information, please get in touch. If you’re looking for a used car on finance in Derby, you can also contact us about this, and we will be happy to help you in your search. You can also view our cars online.