GAP Insurance
Don't get hit in the pocket if your car is a write off!! Last year over 1.5 million cars were stolen, and 750,000 cars were written off (ONS). A large percentage of car owners lost thousands of pounds through "insurance shortfall". You could be next, if you don't take out gap insurance! Very often it means the difference between a bad week and a bad year.
What is insurance shortfall?
Insurance shortfall is the difference between the amount your insurance company pays to you in the event of a total loss or write-off and the amount you owe the finance company which issued your loan agreement.
If you haven't got GAP insurance you will still have to repay the finance company for a car you no longer own, and this can leave you seriously out of pocket.
Typical Example without GAP Insurance
| Original valuation of your car: |
£8000 |
| Insurance Company Payout: |
£6000 |
| Insurance Shortfall: |
£2000 |
| |
|
| Total Received by you |
£6000 |
Typical Example with GAP Insurance
| Original valuation of your car: |
£8000 |
| Insurance Company Payout: |
£6000 |
| Insurance Shortfall: |
£2000 |
| GAP Insurance Cover |
£2000 |
| Total Received by you |
£8000 |
Why is there shortfall?
There is a shortfall because the insurance company pays out insurance based on their estimate of the car's market value when the un-recovered theft/write-off occurred. The amount you paid when you bought the car is not taken into account. Almost inevitably there will be depreciation of the value of your car - and unless you take out gap insurance, you bear the brunt.
How does GAP Insurance cover me?
Subject to certain terms and conditions, gap insurance will take care of the outstanding balance on your finance agreement, after the insurance money has been taken into account. It covers the full term of your loan, includes up to £300 of insurance policy excess, and in our opinion is pleasingly inexpensive.
