What is GAP Finance Insurance?
When you take out a finance agreement to buy a car or van it may be a good idea to take out Gap Insurance.
What Is Gap Insurance?
Gap Insurance covers you in the case of your car being written off. Your car insurance will cover you for the value of your car at the time of the accident. This value may leave a substantial shortfall when it comes to the outstanding finance that you could owe on your vehicle. The difference between the insurance valuation and the amount owed on the finance agreement is called the Gap, hence the term Gap Insurance.
Why Does A Shortfall Occur?
As a general rule cars can depreciate by a significant amount once you have taken delivery of the vehicle. Depending on the type of vehicle, make & model, the depreciation might be more substantial. So if the vehicle were to be written off you may get a nasty shock. Gap Insurance protects you so you don´t have to worry. The insurance company protects your interests by paying the Finance Company the outstanding shortfall.
Does Gap Insurance Cover Me For Just An Accidental Write Off?
No, most policies also cover you in the event of theft. With car cloning on the rise and other types of car theft it is worth taking this into consideration.
When Does Gap Insurance Not Cover Me?
There are always Terms & Conditions in any agreement so it´s important to read them to be fully acquainted with what is covered. An example of where you may not be covered could be a situation where you the insured leaves their keys carelessly unattended. A degree of diligence is always required.
