Don’t have a clue about Gap insurance? Good job we’re here to tell you all about it. If you don’t already have it and want to find out when the right time to invest might be, find out more here.
What is gap insurance?
Gap insurance is often flogged by pushy car salesmen and it does the job of covering the difference between the amount you get paid out from your insurer, should your car ever be written off, and what you paid when you bought it. Your dealership might offer it to you when you buy your car or you can shop around if you prefer for a specialist provider who can provide you with a quote.
Get to grips with the basics of gap insurance to help you decide whether you think you need it or not, as well as how it works and what to keep an eye out for if you’re considering buying it.
When should you consider purchasing gap insurance?
If you’re tight and don’t like putting your hand in your pocket, then this might take some time for you to make up your mind whether you need it or not. Basically, if you’ve purchased your car on finance or you’ve got a loan to help pay for your car if your car is ever written off, your car insurance might not cover the outstanding loan.
Why I hear you ask, well this could be due to a number of reasons, maybe the finance or loan has a high interest, or maybe you’ve got a whopper of payment due at the end. Whatever it may be, you could end up with no car and still owe money out, imagine how crap that would be? You could be left high and dry with barely a penny to scrape together for a new car.
As you’ll well know, the minute you drive your car off the forecourt, your car begins to depreciate, so whatever you do try not to get caught out with outstanding money costs to cover the loss in value should the worse happen. Remember though, if you were considering purchasing gap insurance, you don’t have to do it immediately when you buy your car, you can have a used car and still get gap insurance, of course, the more your car depreciates in value, the less useful it can be.
If you’re going to considering getting it, it's probably worthwhile getting it when you first buy your car. Or, you might find that if your car is used and has lowered in value, you might be able to cover the costs if anything happens to it.
When is gap insurance not worth buying?
So as gap insurance is not essential, some people just see it as an unnecessary cost that they don’t really want to pay, which is fair enough. If you really don’t want to pay for it though, then the best time to probably not buy it is if you still within the first 12 months of owning a brand-new car. If you’ve got comprehensive car insurance, then it's more than likely that your policy offers a ‘new car replacement’, so you’ll be sorted. You’ll be able to bag yourself a brand new car of the same make, model, and specification, so adding on the extra costs of gap insurance might seem like a bit extra.
It might also not be worth getting gap insurance if you’re happy with getting a cheaper replacement. If you’re happy to just accept a settlement figure and buy a new car if your car was to ever be written off or stolen, then gap insurance is probably not worth thinking about.
Your settlement figure will be based around the current value of your car at that time, so you’ll more than likely be able to find one very similar more or less, so you shouldn’t be left in limbo.
Another factor that might be worth considering is if you’re buying an older and more used car, then of course the lower it will drop in terms of value. This would mean that the difference between the amount you paid and the current market value would be much less and making gap insurance worth basically nothing compared to a brand new one.
The cheapest way to buy gap insurance
Looking to buy gap insurance, then there are just so many different ways that you can go about it. There are loads of different places out there that sell gap insurance but you will usually find it being sold by dealerships or specialist brokers.
It's probably unlikely that you’ll be able to buy it from your car insurer, but it's worth noting that it’s a good idea to ger more than just your dealer's cover, and it might be cheaper to do this online. If you were to buy from a dealer, then this is more than likely going to be the expensive option.