It is a worrying time for motorists with just about everything becoming more expensive. The cost of new and used cars, insurance, fuel and maintenance are all rising, which are even harder to manage when you consider the overall cost of living crisis that is gripping the UK.
In situations like this, you want to make sure that you have financial protection in place and one of the best ways to do this is with gap insurance.
Gap Insurance Overview
So, what is gap insurance exactly? Essentially, this is an optional type of insurance that offers financial protection for motorists after a write-off. In a write-off, motorists would only receive the current market value for their vehicle as a payout. Due to depreciation, this can be thousands of pounds less than what was originally paid for the vehicle or left outstanding on a finance agreement.
With gap insurance, this shortfall is covered so that a motorist can afford a replacement or pay off the amount outstanding on the finance agreement. Keep in mind that cars lose around a third of their value after the first year and over half of their value after three years, so this could leave a motorist short by an enormous amount.
Who Will Benefit the Most?
Gap insurance is a type of coverage that every motorist should consider, but there are some people that it is particularly useful for. These are those that have purchased a new car as they stand to lose the most in the event of a write-off, especially if it was a high-value automobile. It is also a good idea if you have paid for the car on finance so that you do not end up owing the creditor money for a car that no longer exists – this could strain your finances and make it hard to find a new car.
Is it Worth it?
Many will wonder if gap insurance is worth it because it is another expense to manage. You only need to consider the number of accidents on the roads each day to see why it might be worthwhile and many people end up in a write-off without doing anything wrong. Additionally, cars are declared written off when they are stolen and never recovered and car crime is a growing problem in the UK.
It is undependable that many motorists are stressed about money right now with costs so high. Although it is another cost, gap insurance could end up saving you a fortune and it is a type of insurance that should be considered. Accidents are common in the UK and car crime is on the rise, so it is important to have financial protection and reassurance in the form of gap insurance.