All the Facts You Should Know About Gap Insurance in the UK.
Gap Insurance covers your car, and it is important for you as a consumer to understand it well. Very often you will have an aggressive salesman trying to sell you gap insurance. This insurance covers the price you paid for your vehicle and the price an insurance company will give you in the event of theft or if your car is written off. You should understand the basics of the gap insurance and the concept of guaranteed asset protection in order to get the right one. You should know how it works and what to be aware of when you are thinking about it.
Why does gap insurance exist? .It is an unfortunate reality that when you buy a new car, the value of your car drops to one-third its cost the moment you drive it out of the showroom. In the first year , the value of your car will further drop to 40%and in the next three years to 60% on an average. This has been stated by AA.
If your car is written off or stolen, the insurer will pay out the sum that the car is worth at the time, and the amount will be much less than what it was when you purchased it. This means you get a replacement car and there is a “gap” sum between the amount you have paid originally for the car and what your insurer pays.
In case, you choose to purchase gap insurance, dealerships generally sell it. The policies are priced between £100 and £300 for three years of insurance cover. People take gap insurance primarily for the reason that the valuation of their car drops and depreciates fast especially if their car is new.
How does your car depreciate?.The depreciation of your car depends upon factors like model, features, make, mileage etc. Now, there is a common question among car users in the UK — can gap insurance also be taken for used cars? Yes, you can take it, but it is more prudent for you to opt for gap insurance when you are taking a new car. It is obvious that the gap sum that is paid out for a used car is already less as it has depreciated over time.
Know more about the different kinds of gap insurance .
There are different kinds of gap insurance and they are:
It is always prudent for you to take the help of an experienced and qualified insurance advisor to understand gap insurance better. With the aid of a specialised professional, you are able to understand the different terms and conditions of the insurance document. You can also get your doubts clarified. Gap insurance is highly popular in the UK, and you must ensure you rely on credible insurance providers when you are going in for one. Last but not the least, read the fine text that is mostly below the main terms and conditions. Read well and ask the insurance advisor for clarifications so that you do not miss anything.