When it comes to driving in the UK, motorists know they need to get insurance. However, are they fully aware of all the types of insurance options out there? All the stats point to no, which is why we’ve decided to highlight Gap Insurance below.
What is Gap Insurance?
This is the type of insurance you take out when you buy yourself a new car. It then covers the difference between the amount your insurer would pay and the amount you paid for your car if it’s stolen or written off.
Therefore, if you pay £20,000 on a car, or take out finance to this amount and your car gets damaged, the insurer will only hand you a cheque for what they think the car is worth. Say this is only £13,000 and the incident happened quite soon after purchasing your car, you could be left £7,000 down, or in debt to your finance company for a car you no longer own. This is where Gap Insurance steps in, helping to pay the difference.
Gap Insurance in the UK
While we’re all aware that insurance is something we have to take out when purchasing a car, research has found that only a tenth of UK motorists take out Gap Insurance. On top of this, the research found that only 38% of those surveyed were aware of this form of insurance, meaning the one in ten purchasing it was only a fraction of motorists on UK roads.
And, given that 86% of motorists use a loan to buy a car in the UK, not being aware of Gap insurance could leave a lot of individuals potentially at risk. However, you need to weigh up whether it’s right for you, but, being aware of it could be the difference between a large debt or no large debt.
When do you need Gap Insurance?
While the benefits can be seen above, this type of insurance may not be for everyone. If you’re wondering if it’s for you or not, we’ve highlighted the three times you’ll most likely want to invest in it below.
- You’ve taken out a large loan to pay for your car
- You’re concerned that the car could depreciate in value quite quickly
- You have your car on a long-term lease
One thing to keep in mind is, if you’ve bought a brand-new car, you may not need Gap Insurance. This is because many insurers will replace a brand-new car if it’s written off within the first year. However, if it happens a year later then you won’t be covered, and Gap Insurance can often only be bought up to a year after purchasing your vehicle.
So, next time you head out to get yourself a new car, make sure you’re aware of all the options available to keep your car as safe as possible.