Like all forms of insurance gap insurance can range considerably in price and it is always worthwhile shopping around before settling on the type of gap insurance you require. All insurances offer peace of mind whether you require a pay-out or not and it is exactly this commodity which makes gap insurance worthwhile.
Simply put, gap insurance works by way of bridging the financial gap between the amount an insurance company pays out against a written-off vehicle and the amount of finance which may be outstanding. After a vehicle has been written-off most vehicle insurers will pay out only the amount the car was worth on the day of the accident which means a shortfall of what you are paid and what you still owe. This can sometimes be a considerable amount and depends largely on the make and model of the vehicle and how quickly it depreciates.
Gap insurance – a useful commodity
Gap insurance is popular with drivers because it removes the nightmare of having to continue to pay finance on a vehicle which is beyond repair. Peace of mind, as everyone knows, is priceless and with gap insurance drivers are purchasing just that. Gap insurance is payable in a one-off lump sum at the time of vehicle purchase and a separate gap insurance policy will be provided which you should retain carefully along with your vehicle insurance paperwork.
Gap insurance is also available even if you pay cash for your car and works, instead of protecting the finance company; it protects you by making your bank account whole again due to any shortfall insurance payout.
Without gap insurance you could be in the unhappy position having to choose between refinancing your vehicle loan with no vehicle, carry on making payments until the loan is cleared off or use up any savings you have in paying off the debt.
In the succinct words reminiscent of Mr Wilkins Micawber:
After vehicle write-off insurance pays £1000
Amount remaining on loan £500
Result – misery.
After vehicle write-off insurance pays £1000
Amount remaining on loan £500
Gap insurance pays this difference to fully pay off the loan
Result – happiness.
Are you looking for gap insurance? As one of the largest suppliers of Gap insurance policies, we can help you. Get in touch today for your gap insurance policies.
