LONDON, ENGLAND, March 05, 2013 /24-7PressRelease/ -- If you are thinking about buying a new or used car, you are more than likely to be offered GAP Insurance by your local car dealer. The following Auto Trader guide details the different types of Gap Insurance.
What is GAP insurance?
If a car covered by fully comprehensive insurance is declared a write-off, and your insurance claim is successful, the insurer will reimburse you the market value of the car at the time it was damaged. The amount you receive comes from a valuation service (CAP and Glass's Guide are two common ones).
GAP (Guaranteed Asset Protection) insurance covers you for the difference between this payout and the original value of the car. This can give you the peace of mind that should the worst happen, you will be able to replace your crashed vehicle with one of the same specification. If you are paying for your car on finance, GAP insurance will also ensure you don't have a shortfall to pay your finance provider.
How does GAP insurance work?
After a write-off, GAP insurance will pay you the difference between the Comprehensive insurance settlement and your vehicle's outstanding finance, purchase price or replacement cost, based on which is the highest amount.
GAP insurance must be purchased within 180 days of delivery of your vehicle. GAP insurance providers will also stipulate what ages of car are eligible. Often only vehicles less than seven-years old and with a total mileage under 80,000 miles are eligible for GAP insurance.
When is GAP insurance right for me?
On average, cars tend to loose around half of their retail value in the first three years of ownership. If you have saved hard to buy your car, or you are still paying for it with finance or on a contract hire basis, the Comprehensive insurance settlement value of your car if it is written off can be hard to stomach. You may find it is not enough to allow you to afford a replacement car of the same specification, or that you are left owing a shortfall to the finance company. If these circumstances could affect you, GAP insurance might be ideal for you.
What are the different types of GAP insurance?
Back to invoice GAP
This policy will pay the difference between the Comprehensive insurance settlement and the vehicle invoice price or outstanding finance, whichever is higher.
Agreed value GAP
Here you will be paid the difference between the Comprehensive insurance settlement and the Glass's Guide Retail Price at the time of the GAP policy purchase.
Vehicle replacement GAP
Choose this to cover the difference between your Comprehensive insurance settlement and the cost of a vehicle of similar age, mileage and specification to the one you originally bought or to cover any outstanding finance, if this is a higher amount.
Contract Hire GAP
This is tailored towards clearing any outstanding rentals on your Contract Hire agreement.
To find out more about Auto Trader Gap Insurance, click here.
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