What Is Gap Insurance And Why Should I Take It Out?
In the UK, half a million or cars or motor vehicles are stolen every year, most of these are written off or vandalised. On top of this there are a large number of accidents each year and you could be the next person to see your vehicle written off.
If your vehicle is written off your motor insurer will only pay the current market value for your vehicle! So what happens if the current market value is not enough to replace your vehicle or pay off your finance or contract hire agreement? Simple, there is a financial gap that you will have to pay out of your own pocket, an example of this is as follows:
Imagine you buy a car for £10,000 – you put down a deposit of £1000 meaning you have to take out a loan of £9,000. One year on, the car is involved in an accident and written off. The insurance company pays out only £3,500 yet you have £6,000 still to pay off on your loan – meaning there is a financial gap of £2,500 which you would have to cover yourself.
A Gap Insurance policy will cover you against financial loss should your car be stolen and/or written off.
