Gap Insurance is just like any other insurance. It can't stop an event (for example your car being stolen) from happening. It can, however, make sure that if it does, you're not left financially out of pocket.
Insurance companies like to use long words and have lots of special terms about risk and transferring risk but simply put, Gap Insurance is a way of making sure that if your vehicle is stolen or damaged beyond economic repair, you don't have to foot the financial implications, instead we do.
Why is this such a "Big Deal" and surely this is what your own motor insurance is for?
Yes and no. Your motor insurance company will insure you to drive on the road and also cover any third party costs. Your Gap Insurance is for just one single event, a total loss. Therefore, in order for you to make a claim on your GAP policy, the vehicle must be declared a total loss.
They will in turn then have a legal obligation to offer you the value of your vehicle on the day the event happened. With motor industry experts predicting that vehicles with the average mileage and usage have the ability to lose up to 50% within just the first three years alone. This could mean that any settlement your own motor insurance company give you, could be hundreds, thousands possibly even tens of thousands of pounds less than you originally paid.
If you have paid for your vehicle using a form of finance, this could mean that you are left in the horrible position of having no car to use and still having to make monthly payments. This is when Gap Insurance is good to have.
Equally, if you have paid for your vehicle using cash or savings this could mean that a whopping 50% of your original investment has effectively been wiped off. Again, this is when GAP protection is good to have.
Is Gap Insurance good to have?
Gap Insurance takes away this risk and protects you the only way insurance can, financially, should it happen. If you can't afford to lose a substanicial amount of money due to depreciation, or be left paying finance on a car you no longer have, then yes, Gap Insurance is good to have.
With prices from as little as £51.00 and our average policy cost being sold at just £139.00 is it worth taking the risk and not being covered?