Gap Insurance
Protecting Your New Car or Bike With a Gap Insurance Policy
Why do I need a gap insurance policy? I already have insurance anyway!
That’s what a lot of people say but just imagine you’ve saved up to buy that dream car, bike etc., or you’ve taken out an expensive finance agreement for three years or so. Wouldn’t you want the full replacement value of your pride and joy if the unthinkable happened? Well, if after say 2 years you had a major accident and it was written off, the chances are you’ll be paid out the value of your vehicle minus 2 years. A shortfall that can be a couple of grand!
Its interesting to note that there are 500,000 total losses’s every year and cars depreciate by up to 77%!!!
In most cases an insurance policy will cover you on – theft, accidental damage and possibly natural disaster but the cover is on the depreciated value and not the value on the day of purchase.
So, you will find that you are responsible for the difference of the value that the insurance company pays you for your stolen/damaged item as they will only honour their terms and conditions as contracted.
The solution for the bulk of automobile buyers is gap insurance. A gap insurance policy is a total loss insurance, that will pay back the difference of the amount of your motor vehicle then the insurance company pay’s you for a total loss on your motor vehicle and the value of your motor vehicle loan.
To put it another way, gap insurance fills in the gap value of your vehicle that exists from the day you purchased it to the day of your mishap.
When do I need gap insurance?
If you buy a vehicle that has a history of rapid depreciation then gap insurance is a really good idea and would benefit you the most but the majority of cars deteriorate, so gap insurance is well worth the extra if you can afford it!
Gap Insurance
Why You May Need Gap Insurance
