Most comprehensive car insurance policies only offer ‘new car replacement’ whilst the vehicle is less than 12 months old. If your car is written off or stolen after this period, the insurance pay-out is based on the current market value.
Whichever make and model you choose and no matter how old it is, the moment you drive a car off the forecourt its value starts to reduce.
If your new car is written-off or stolen, comprehensive motor insurance policies will compensate you to the amount that your car was worth at the time of the incident – also known as ‘market value’. Because of depreciation, this will often be lower than the price you paid, and you may have additional remaining debts if you paid for your car under a finance agreement. GAP insurance can cover you against these financial losses, more or less filling the ‘gap’ between the cars market value and the original purchase price plus any outstanding finance.
How Gap insurance works
There are a number of different types of Gap insurance, and it’s important to choose the product suitable for your needs. But the basic premise of Gap insurance is the same. If you bought a car worth £10,000, and wrote it off three years later, when its value had sunk to, say, about £4,000, your Gap policy would meet the £6,000 difference. Some new cars lose as much as two-thirds of their value in the first three years, according to Which? Car experts.
The economic climate is also having a big impact on the market value of cars, as current fuel prices mean that diesels and smaller cars are better at retaining their value. Bigger ‘gas guzzlers’ are likely to devalue quicker, as they’re costlier to run.
You are eligible for cover under this policy provided:
- You purchase this policy within 180 days of taking ownership of the Vehicle from a VAT Registered Dealership or Internet Broker.
- The Net Invoice Selling Price does not exceed £150,000 (one hundred and fifty thousand pounds)
- The Vehicle is listed in Glass’s Guide and is less than 8 years old, and has covered less than 80,000, on the day that You purchase Your policy
- The Vehicle is not specifically excluded under the terms and condition of this policy.
If you change your vehicle, provided that no claim has been made you may transfer the remaining cover to the new vehicle (if the replacement vehicle has a higher purchase price than the new vehicle an additional premium may be required.)
How much will Gap Insurance cost?
Our Gap Insurance costs as littles as £239 for a 5 year policy! Please give us a call for further details.