Many people ask when looking into GAP Insurance Is gap insurance worth it? To answer this question you really need to consider the type of risk and how much you could afford to loose if the worst happened to your car.
Many people buy their GAP insurance for the first 3 years that they have the new car for (but this can work with 2nd hand cars too) because they will depreciate more over this time than any other time of the cars life. It’s in this time frame that GAP Insurance proves to be most useful. If you still don’t fully understand GAP Insurance then please read our quick guide.
Let’s look at some figures of a new car and how much it will loose in value as soon as you drive it home.
Let’s say Car A has a list price of £30,000 and the average price of this drops by about 15% to 20% as soon as you leave the showroom. You’re car is now only worth between £24,000 and £25,500. Say you own the car for a further 2 years, it could loose much more value and now could be worth only £19,000 to £21,000 depending on the mileage.
If you paid cash for the car you’re now down around £9,000, or worst still if you purchased on finance, have a debt over the value of the cost of the car before purchase.
If the worst happened and the car was a write-off, your insurance company would only give you the current value of the car. So in order to replace the car like for like, the insurance company would only allow a £20,000 price. This isn’t good news if you purchased the car on finance and still owe £27,000 worth of debt.
This is where GAP Insurance starts to show its worth. The GAP Insurance would fill the gap between the current value of the car (what the insurance will pay) and the list price of the car new. You already know this (probably) so is GAP insurance really worth it?
With Ala Gap Insurance we created a quote and to get your GAP insurance on the same priced car (£30,000) you would simply pay an insurance of £142 that latest the 3 year period. So 3 years peace of mind would only cost you £142. This would ensure you’re covered if the worst would happen.
So you should ask yourself, is it really worth risking such a high price in exchange for £142?