Why GAP insurance could ease stolen car pain
3 November 2022
| 2 minutes
With around 101,198 cars being stolen each year, it has never been more important to acquire GAP insurance
- With the cost-of-living crisis gripping the entire nation, people are looking for new ways to save money and protect their investments
- GAP insurance is a great way to ensure you never end up out of pocket if your vehicle is stolen or written off
- With used car prices on the rise, protecting your finances and your vehicle has never been more crucial
With the cost-of-living crisis affecting almost every sector, the car industry has now become one of the latest to take a hit. Used cars in particular are rising in cost, both outright and on finance deals. Average used car prices are reportedly now £4,500 higher than pre-pandemic prices. If you’re looking at a used car for your next vehicle, it has never been more important to protect your investment in the event of a total loss. This is where GAP insurance could help you out.
GAP insurance helps cover the difference between the value of your vehicle at the time of purchase and the amount that your motor insurer pays out. Since used car prices are currently high, the amount you’re paying now, or the current value (depending on your policy) will be protected if your car is stolen or written off if you purchase GAP insurance now. This is perfect for when prices inevitably drop in the next few months.
GAP insurance has plenty of benefits that many drivers aren’t aware of, so taking out a policy could be the smartest decision you ever make.
What GAP insurance options are there?
The most popular GAP insurance policies available include:
Back to Invoice Plus or Return to Invoice Plus policies will pay out the difference between the original purchase price of the vehicle and the amount that your motor insurer will pay out in the event of a total loss. This policy applies to cars bought outright or on finance.
Vehicle Replacement Plus is similar to Back to Invoice Plus, but instead of considering the original purchase price of the vehicle, your GAP insurance provider will cover the cost between what your motor insurer will pay out and the cost of a replacement vehicle. This policy is suitable for anyone concerned that buying the same car again will be more expensive.
Contract Hire Plus applies to vehicles taken out on a leasing contract. GAP insurance will cover up to 100% of the outstanding rentals, as well as cover any shortfall in the market value settlement provided by the insurer. Some people have also taken out formal extensions on their leasing contract, and we can cover you for those extra 12 months.
Agreed Value GAP insurance is perfect for vehicles bought privately. This policy will pay the difference between your motor insurer’s settlement and the Glass Guide’s retail value of your vehicle at the time you purchased your policy. This is another great option to make up for the rising prices of used cars, and can be perfect for those keeping their current car whilst it is too expensive to buy another one.
What are the benefits of GAP insurance?
“As a rule of thumb, the newer the vehicle you’re buying, the more you will benefit from having GAP Insurance coverage in the event of any incidents.” – ALA Insurance
GAP insurance has various benefits perfect for anyone who has bought, leased or financed their vehicle. Cars depreciate from the moment you drive them away from their place of purchase, and a second-hand car can lose as much as 20% of its value in the first six months. GAP insurance can help protect your investment by potentially saving you thousands of pounds should your vehicle be declared a total loss.
Taking out a finance deal for a used car can sometimes be risky. If your vehicle is considered a total loss, the interest accumulated on the agreement could mean you have to pay a large sum of money to your lender that isn’t covered by your insurance company.
GAP insurance can help bridge the difference between what you owe the finance company at the time of claim and what your motor insurer will pay out.
So, if you have taken out a large loan to pay for your vehicle, you have a long lease term, or you’re worried about depreciation, GAP insurance is a great choice for protecting your finances should the worst happen to your car.
Protect your investment with a GAP insurance policy today
In 2022 a study conducted by ALA Insurance and YouGov showed 59% of people had still never heard of GAP insurance , and 71% of people who had their vehicle stolen or written off did not have GAP insurance . To ensure you are getting the best deal possible and to answer all of your questions, it is worth seeking the help of a reputable GAP insurance company to create and handle your policy. There are coverage limits to be aware of, as cars must be under a certain age and mileage in order to qualify. You must also purchase your policy within a certain timeframe from the day that you bought your car.