When you’re buying a car, depreciation isn’t something you typically think about. However, it is something that can have a significant effect on your finances if you were to get into an accident.
That’s because, if the car is written off, most insurers will only pay you part of what the car is worth. This often leaves drivers stuck as they simply can’t afford to replace the car with the money paid out on their insurance. That is of course, unless they have GAP insurance.
Do you need GAP insurance?
It isn’t a legal requirement to have GAP insurance, but it can certainly prove invaluable if you were to get into a serious accident.
It’s especially useful for those who took a car out on finance. It basically provides a sum of money to make up the difference between what the insurer will pay and the amount you still have left to pay on your loan.
Of course, it’s not just designed for those who have taken a car out on finance. If you bought your car and it has quite high level of depreciation, you could also really benefit from this type of insurance.
So, if you wouldn’t be able to buy a new car and you’d likely be left with some debt if the car is written off, GAP insurance could be a very valuable lifeline.
Importance of comparing GAP insurers
Like any type of insurance, it’s really important to compare your options before choosing a GAP insurer.
Different companies have varying policies and costs. There may also be a substantial difference between the amount you have to put down when you take out a policy. Some insurers also hide various terms and conditions in the small print. So, you need to make sure you know exactly what you’re getting and what the policy includes.
The main benefit of comparing insurers however, is the potential cost savings involved. Some insurers charge hundreds of pounds more than others for the exact same type of cover. So, without comparing your options you could end up paying out hundreds more pounds than you need to.
Overall, GAP insurance can prove invaluable if you get into a serious car accident. However, not all policies are equal so it is important to compare the different ones available and ensure you’re choosing a reliable and respected insurer.