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...

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... 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... What Is Insurance? What exactly is insurance? It sounds like a very basic concept, but it is important to know what insurance is, in order to work out why insurance is so essential to modern-day activities, and why... 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... Van Insurance Most people know about car insurance, but what about van insurance? Clearly if you drive a van then you need to know about van insurance. There are various different types of van insurance which... Home Insurance Home insurance is one of the most common types of insurance product, and anyone who has a home will be familiar with it. Home insurance is usually contrasted with contents insurance, which is a... Saving Money on Car Insurance Like with most types of insurance, the car insurance sector is extremely competitive. There are a lot of providers of this product, but also a lot of different factors that are taken into account to... Pet Insurance People love their pets - whether you are a cat lover or a dog lover, or prefer something like a rabbit, a guineapig, snakes, hamsters or indeed any animal that you can think of, then pet insurance... Life Insurance One of the most well-known types of insurance product is life insurance. And this does very much what it says on the tin - it insures against the life of a person. Thus, if the policy holder (the... Income Insurance Income insurance is sometimes referred to as income protection insurance. As the name suggests, this product is focused around what you earn from work. This type of policy is something that will...