Shortfall Gap Insurance
What is Shortfall Gap Insurance?
Welcome to our introductory into Shortfall Gap Insurance. This type of financial protection is often associated with the purchase of a vehicle from a motor dealer. The purchase price of a car, motorbike, motorhome or a van can be substantial and also comes with a further inevitability......depreciation! Your vehicle will ,over a period of time, lose value from the original price you paid for it.
The rate of depreciation can vary, with on a new car a figure of between 50 and 60% in the first three years. Of course we can all accept that this is almost always the case, as unpleasant as it may be. However, if the vehicle is involved in an accident, or is stolen, then your motor insurance policy will protect its value. This will mean that your motor insurer will provide you with the value of the vehicle, but this will only be the value of the vehicle at that time, NOT the price you originally paid.
This will mean you may suffer a financial shortfall between the vehicle value now and the original purchase price, finance settlement or even the replacement cost of the vehicle. Not a great situation as you no now longer have your vehicle and insufficient funds to replace it. A shortfall 'Gap' exists. This is where Financial Shortfall Insurance can step in. This will provide a 'top up' of your motor insurers settlement to either the outstanding finance settlement, the original invoice price or even the replacement cost of the equivalent vehicle.
Gap Insurance has been offered by motor dealers for many years, but is now also available from independent insurance brokers also. We aim to provide you with as much information on your options as possible. Shortfall Insurance is not a legal requirement, unlike other insurances, but with a vehicle you can face thousands of pounds of depreciation over a short period of years. In the event that the vehicle is taken away from you in an accident or theft, does it not make sense to consider protecting your Shortfall Gap?