What is GAP insurance?
This is a policy that is designed to cover the difference between what you paid for the car originally and what the insurance company pays out in case of a write off. Cars depreciate in value and if you have the misfortune to have a car written off, the amount an insurance company is willing to pay out is based on its value at the time of the accident. If the accident occurs several years after you have bought the car then the pay-out could be a lot less than you originally paid for the car.
This is where GAP insurance comes in, which is designed to pay out the difference, so you are then armed with the full amount required to buy the same car and at the same age as you originally purchased. This could be particularly useful if you buy a new car as depreciation is always at its greatest in the first three years of a car’s life.
What’s more, it’s not just cars that can be covered but van owners can also take out a GAP policy to cover their LCV too.
But how do you know if a GAP insurance policy is for you, and if so which one is the right one? Well Parkers is here to help with some handy guides including a Guide to GAP insurance.