GAP Insurance

If you have bought a car in recent times, then you will probably have come across GAP insurance as the vendor will have asked you if you want GAP insurance or not. If you are not familiar with buying and selling cars, then the chances are that you won't have heard of GAP insurance.

So what exactly is it? Well, let's say you buy a car that costs £20,000. Within a couple of weeks of buying it, you have a crash that writes the car off. At that point the car might have a value of £16,000 as perceived by the insurer, which leaves you with a shortfall of £4,000 if you want to get the equivalent car again. GAP insurance will cover that difference.

So in summary, this product (of which there are various different types) covers the difference between the payout you receive from your insurance and the initial price of your car - that's the gap.

As with any insurance product that is not a legal requirement, it is up to the individual to decide whether they want it or not. Obviously if you are very concerned about your new car depreciating in value rapidly, then this could be an attractive type of insurance to take out; or perhaps if you've taken out a loan to cover the vast majority of the cost then again this could be a form of protection to consider to ensure that you don't enter a negative equity situation.

There are many companies out there that offer GAP insurance, so if you are interested then be sure to shop around and get the best quote.

An interesting article with information about GAP insurance can be found on the website of fca.org.uk which states that GAP add-on insurance claims ratios from 2008 to 2012 were at an average of just 10%.

Related Articles...

Property Insurance Property insurance is a product that applies specifically to property, and has various different types of specific that are subsets of the general umbrella term 'property insurance'. Specific... Motorbike Insurance Motorbike insurance might sound like a bit of a niche category of insurance, but there are actually a huge number of people who ride these sorts of vehicles, and so even within this there are... Crop Insurance There are two main types of crop yield insurance available, which come under the category of types of agricultural insurance product. It is self-explanatory what crop insurance guards against -... Contents Insurance Contents insurance is a type of insurance product that covers the items that you have - the contents - of your home. There are a range of different providers of contents insurance out there on... Agricultural Insurance Agricultural insurance is a niche type of insurance product that is available for those who work in specific areas of agriculture. This type of product could offer piece of mind against various... Vehicle Insurance Vehicle insurance is the category of insurance products that cover, surprisingly enough, vehicles. These can be any sort of vehicle that you can think of, with of course the most common product... Types of Car Insurance There are various different types of car insurance product that are available in the UK. The minimum level of cover that is available to meet legal requirements is a product called third party... Flood Insurance Flood insurance is a specific product under the umbrella of insurance and it covers - as the name suggests - losses that occur due to flooding. In many cases, this form of protection (flood... Prize Indemnity Insurance Prize indemnity insurance is a purchase that would be considered by someone offering a large prize and thus could stand to lose a considerable sum of money. This form of insurance would mean that... Saving on Home Insurance Home insurance splits into the bricks and mortar insurance - buildings insurance - and the stuff that you put inside your house such as your valuables - the contents, hence that bit is called the...