If you’re considering a new car then it may be worth considering protecting your interests by taking out GAP insurance, but what is it?
Guaranteed Asset protection, otherwise known as GAP insurance for short, is taken out in addition to your standard vehicle insurance. It is designed to protect you from any shortfall in the event of a write-off following an accident or theft.
So, if you’ve already got car insurance then why would you need a Gap insurance policy? Well, if your car is declared a write-off by your vehicle insurer in the event of a theft or accident there may be a shortfall between the insurer’s market value and the amount required to settle any finance agreement.
For example, a customer leases a Ford Mondeo at an original purchase price of £18,475. Twelve months later the car is involved in an accident and written off. The finance company is owed £13,713 for the vehicle but the insurance pay-out is only £12,462 leaving a shortfall of £1,251 that the customer has to pay.
A GAP insurance policy would bridge this shortfall helping you to avoid any nasty financial pay-outs. So, there you have it!