What is the point in Gap Insurance? This question can be applied for
all types of Insurance: Home Insurance, Travel insurance, Mobile Phone
insurance, Car insurance and the list goes on and on, I have even read
that David Beckham’s right leg is insured.
Insurance is designed to protect you from risk. It is designed to protect you from the worst possible situation happening. You take out car insurance to protect your car from the risk of being stolen or written off.
And, in the UK, there is a considerable risk. Did you know that on average, 600,000 vehicles are written off in the UK each year? Did you also know that on average, 100,000 vehicles are stolen in the UK each year?
However the thing with car insurance is that the majority of customers assume that it will 100% protect them from these two risks. This is incorrect. Why? Because the basic comprehensive insurer will only pay you the market value of your vehicle at the time it was written off or stolen.
And in the majority of cases, you will be surprised about your vehicle's market value.
Why? Simple. Because of vehicle depreciation. Within the first three years of your vehicles life, it will have depreciated (lost) up to 50% of its value.
So let’s look at an example.
If you purchase a Ford Focus for 10,000. Three years later, it is stolen. Your Ford Focus now has a market value of 5,000. It has depreciation and consequently lost 5,000. You will only be paid this 5,000 by your basic comprehensive insurer.
This means you now have a GAP or a SHORTFALL of 5,000.
This means that you are unable to purchase another Ford Focus. This means that the basic comprehensive insurer has not fully 100% protected you from risk.
This is where Gap Insurance comes into play. The most basic Gap Insurance policy type will pay the difference between what you receive from your comprehensive insurer and invoice price you originally paid for your vehicle. Referring back to the example above, in this case, the Gap Insurance provider will pay you the outstanding 5,000.
There are four types of Gap Insurance: Return to Invoice (stated above), Vehicle Replacement, Contract Hire/Finance Gap and Agreed Value. To find out more, please visit our two online brands, Easy Gap and GapInsurance123.
Gap Insurance is a vital source of protection for your vehicle, but most importantly your finances.
Insurance is designed to protect you from risk. It is designed to protect you from the worst possible situation happening. You take out car insurance to protect your car from the risk of being stolen or written off.
And, in the UK, there is a considerable risk. Did you know that on average, 600,000 vehicles are written off in the UK each year? Did you also know that on average, 100,000 vehicles are stolen in the UK each year?
However the thing with car insurance is that the majority of customers assume that it will 100% protect them from these two risks. This is incorrect. Why? Because the basic comprehensive insurer will only pay you the market value of your vehicle at the time it was written off or stolen.
And in the majority of cases, you will be surprised about your vehicle's market value.
Why? Simple. Because of vehicle depreciation. Within the first three years of your vehicles life, it will have depreciated (lost) up to 50% of its value.
So let’s look at an example.
If you purchase a Ford Focus for 10,000. Three years later, it is stolen. Your Ford Focus now has a market value of 5,000. It has depreciation and consequently lost 5,000. You will only be paid this 5,000 by your basic comprehensive insurer.
This means you now have a GAP or a SHORTFALL of 5,000.
This means that you are unable to purchase another Ford Focus. This means that the basic comprehensive insurer has not fully 100% protected you from risk.
This is where Gap Insurance comes into play. The most basic Gap Insurance policy type will pay the difference between what you receive from your comprehensive insurer and invoice price you originally paid for your vehicle. Referring back to the example above, in this case, the Gap Insurance provider will pay you the outstanding 5,000.
There are four types of Gap Insurance: Return to Invoice (stated above), Vehicle Replacement, Contract Hire/Finance Gap and Agreed Value. To find out more, please visit our two online brands, Easy Gap and GapInsurance123.
Gap Insurance is a vital source of protection for your vehicle, but most importantly your finances.
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