GAP Insurance and Why It is Best Suited to Financed Automobiles

16.05.2017: Many motorists have heard of GAP insurance and are unsure exactly what it is and whether or not they need it. The truth is that it is

Many motorists have heard of GAP insurance and are unsure exactly what it is and whether or not they need it. The truth is that it is actually a very important form of cover that helps you to protect your investment and not find yourself seriously out of pocket if your automobile is written-off.



Although valuable for all motorists, GAP insurance is particularly important for those that purchase a new car or those that are financing the automobile.



What is GAP Insurance



So, what exactly is GAP insurance? When an automobile is written off, insurers will only payout the current value of the vehicle.



This could leave a significant shortfall between the amount that you paid or the outstanding finance balance and the payout, which is what is covered by GAP insurance. This can often be an enormous gap due to depreciation, which can be as high as 40% after just one year when you buy new.




Why it is Essential for Financed Automobiles


For those that finance their vehicle, GAP insurance policies known as Return to Invoice will be the best type of coverage. This is because finance can be cleared and anything remaining is yours in the event of a total loss claim. This allows you to protect your investment by having enough money to clear outstanding finance and be left with any amount leftover once it has been paid.



As an example, you could have an invoice of £20,000 and owe the finance company £18,000 at the point of claim but only receive £15,000 from your insurance company. A policy from a specialist like ALA will payout the £5,000 gap, seeing you then pay the £18,000 to the finance company and pocket the remaining £2,000.





Write-Offs



Every motorist believes that they will not get into an accident where their car is written off, but the unfortunate fact is that accidents to occur and often it is not your fault. In addition to this, vehicles that are stolen are usually classified as written-off and car theft is rife in this country - a vehicle is stolen every minute and 33% of these are never recovered.



It is clear then that GAP insurance is necessary for any motorist that wants to protect their investment and it is especially valuable for those that finance their automobiles. You do not want to have the trauma of having your car written off and then having to shell out a large sum to cover the gap, so make sure that do not find yourself out of pocket.




- Will Hope -

Permanent-URL: http://www.automobilsport.com/gap-insurance-why-best-suited-financed-automobiles---164927.html

16.05.2017 / MaP

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