Unfortunately no matter what you may believe, your vehicle is a depreciating asset. After a period of time, it will indefinitely go down in value, the average car actually depreciates up to 50% within the first three years of ownership. When you think about it, it does make sense, nobody would pay the same amount for a three year old vehicle as they would for a brand new one from the car showroom.
What happens if you are involved in an accident?
If your vehicle happens to be written off due to an accident, or you find yourself the victim of a robbery, it is a sad fact but a fact all the same that your own motor insurance, although necessary to allow you to drive on the roads, will actually only settle with whatever amount your vehicle was worth on the day it was written off/stolen. As we have already pointed out, this is likely to be a lot less, depending on how long you have owned the vehicle for. Of course, this means that if you were not insured by Gap insurance, you would only have this amount (that your insurance company has awarded) to clear any outstanding finance or replace your unfortunate vehicle. Gap insurance is designed to protect you against any financial catastrophe. Gap insurance covers the Gap between this valuation and whatever you still owe your finance company/paid in the first place/whatever amount it takes to buy the same standard of vehicle you drove away from the showroom in again. Depending on which type you choose, there are different types of gap insurance depending on what you and your vehicle need.
Which type is right for you?
If you never have the opportunity to buy your car then Contract Hire/Finance Gap Insurance is for you. This will literally pay the difference between the valuation your motor insurer awards and the outstanding amount you still owe to your finance company. Find out more Finance and Contract Hire Gap Insurance
Return to Invoice Gap Insurance will pay the difference between the amount your motor insurer pays and the amount you originally paid for your car, ensuring you are not out of pocket.
If you would like to be insured so that if the unthinkable did happen, you would be reimbursed with the amount needed to buy the exact same standard of vehicle that you drove away from the showroom in, age, mileage etc, then Vehicle Replacement Gap Insurance is for you.