Image by freepik
Ever wondered what GAP insurance is and how it can save you a lot of money if something happens to your car?
Gap insurance, short for Guaranteed Asset Protection, is an additional protection you can take out alongside your comprehensive car insurance policy. You might be curious about the distinction, and we're here to shed light on why it's worth considering.
With comprehensive insurance, if your car is totalled or stolen, coverage typically extends to the market value of your vehicle. However, new cars depreciate rapidly, often losing up to 40% of their value in the first year alone. For instance, if your £30,000 car depreciates by 30% , your insurer would only compensate you £21,000. This shortfall can pose challenges, especially if you're looking to replace your car, potentially leaving you owing more to the lease company than the car's market value.
This is where GAP insurance comes into play. It bridges the gap between the car's value and the insurance payout, ensuring you're not out of pocket and can easily cover lease obligations and replacement costs. So, in this instance the £9,000 you would be short of would be covered by GAP insurance. By providing financial protection and peace of mind, GAP insurance offers invaluable security in the event of unforeseen incidents involving your vehicle. It is definitely something worth considering and looking into , offering not just peace of mind but potential savings in both stress and finances.