By now you will have most likely heard about GAP insurance. But it is surprising how many still don't know what it is, how to utilize it properly, and when. This blog will go into detail and strip back all the unnecessary elements and only include the very best, most vital pieces of information for you to make great decisions should your event need to use it in the future. let's dive right in.
WHAT EXACTLY IS GAP INSURANCE?
Keeping this very simple, gap insurance is the difference in money that remains when you take away the amount your insurer is willing to pay it if your vehicle is written off or stolen, vs the price that you initially paid for the vehicle. This is where the GAP insurance comes in.
Depending on what insurance company you are with and of course the value of your vehicle vs the initial purchase price, this sum of money can be extremely high for some. This means that getting GAP insurance could save you a lot of money should you have to go through the misfortune of having to report your vehicle stolen or worse, being a write-off.
WHEN IS GOOD TO GET GAP INSURANCE?
When You Have Used a Loan To Get Your Vehicle
This can be great for covering the difference in the loan payments if anything does happen to your vehicle. You will no longer be eligible to make the payments on the vehicle in question, only if it cannot be repaired.
If you have a make or model that is known to depreciate a fair bit, or if you are generally worried about it regardless of how much it depreciates, the GAP insurance may be for you. It will give you peace of mind and a safety net to fall back on if anything does go wrong.
Long Term Lease Payments
This could work well if you have a PCP deal that that is long term with a mileage restriction attached to the contract, This means you will be protected and could possibly save yourself thousands of pounds depending on how early on in the contract an accident or theft was to occur.
WHAT TYPES OF GAP INSURANCE ARE THERE?
Finance GAP Insurance
This is the most common one that we have talked about most in this blog. This is the basic event where your gap insurance covers the cost difference between car value and the initial purchase price at the time of the accident of theft. This will not cover you for negative equity, however.
Negative Equity GAP Insurance
Negative equity GAP insurance happens when the amount of money you have initially borrowed for the vehicle, is more than the actual value of your vehicle. This could be a problem if you have traded in your vehicle previously, and the money that you have received did not add up to the value of your new vehicle. This is where negative equity insurance can be very helpful. This is the only type of insurance of its kind that will be able to help you out in this situation.
Vehicle Replacement GAP Insurance
If your vehicle has been involved in an accident, and you need to get a new vehicle, this type of insurance will help you cover the margin between the value fo your own vehicle and the price it will cost you to get a new one.
Lease GAP Insurance
This would only be applicable if your method of pay was a lease agreement. This can help you cover the cost of the remaining balance left to pay, and also any other fees that may come along with your contract.
WHO IS GAP INSURANCE FOR?
Gap insurance is a great and useful tool if used correctly. However, it may not be for everybody. Please note you are liable for making your own decisions based on the knowledge we provide, and as a company, we will not be directly responsible for any decisions you make personally.
It may be beneficial for people who...
✅ Would like to get a brand new vehicle
If you have your mind made up and its a new vehicle that you desire, then GAP insurance could be a great option for you. God forbid that you get a new vehicle and crash it in 10 months time,
✅ If you owe money to a finance company
Nobody can predict the future, and although the chances of a crash and even a write off are considered to be low, it's still not impossible. If your vehicle is in the unfortunate situation, of course, your insurance provider will pay ut a sum of money for what the vehicle is currently worth as it stands. But this will not be the same amount, GAP insurance will be able to cover this fee and potentially save you a lot of money
It may not be beneficial for people who...
❌ If you will be happy with a like for like replacement of your vehicle
Some people would still be happy getting the same current value of the vehicle that they had. Which is perfectly okay and would not make much sense for you to be getting GAP insurance.
❌ If your vehicle has a fully comprehensive cover and less than a year old
This is the highest level of car insurance that you can get for your vehicle. It provides cover for your vehicle, you and other road users (depending on the situation). You get provided with a courtesy vehicle whilst yours is being repaired.
❌ If you are driving a used vehicle
Although there are some people out there who do buy GAP insurance on a used vehicle, it doesn't make as much sense compared to GAP insurance on a brand new vehicle. The reason for this of course is that a used car will not depreciate nearly as much as a brand new vehicle. Therefore the extra that you would spend getting GAP insurance may not be put to as good of use.
All in all, GAP insurance is a great tool. Of course, it's not for everyone and your situation is unique to you. Do your research, make sure that you fully understand the pros and cons, and how to utilize it to get the very best out of your situation.
We do have great options for new vans for sale, and we have incredible finance options available. Please do not hesitate to contact us at any point, our check out our van range to see some of the amazing makes and models that we have available for you today!