Unlike third-party motor insurance, it’s not a legal requirement to get GAP insurance on a used Porsche in the United Kingdom. But in many cases, GAP insurance for used Porsches may still be worth considering, depending on the specific circumstances applying to the car and the driver.
Used cars depreciate more slowly than brand new motors, but there can still be a significant financial shortfall if they are written off or stolen and not recovered. A high-value car, such as a Porsche, is likely to lose value faster than other used cars.
Comprehensive motor insurance will pay out on what the car is worth at the time of the incident, which may leave a shortfall compared to the original purchase price or what you still owe on the car. GAP insurance may help cover the financial shortfall. Insureworks can arrange GAP insurance quotes on a non-advised basis and is underwritten by specialist insurers.
Insureworks Ltd is an appointed representative of Your Company Matters Ltd, which is authorised and regulated by the Financial Conduct Authority.
The Impact of Depreciation on a Used Porsche
A new car will always depreciate faster. As soon as you release the handbrake for the first time, the car’s value starts to decrease. Research from Motorway reports that cars can lose between 15% and 35% of their value in the first year.
But that’s not to say the impact of depreciation on a used car is insignificant. By year three, a car may already have lost 40-60% of its original value, and by year five, that figure can rise to 60-70%, showing that depreciation can continue steadily after the early years.
Porsche cars are typically more valuable than the average car. This means the percentage impact in monetary terms is much greater. The shortfall that it can leave behind may be more significant than it appears.
Calculating The Depreciation Impact
Let’s say you’ve bought a second-hand Porsche for £35,000. At this point, you may be a fan of depreciation because it could mean a Porsche is now within budget. You’ll be able to experience that iconic name, and the car that once sat proudly on your bedroom wall is now parked in your driveway.
After a year of ownership, the car is written off. Your insurer values it at £28,000 based on market conditions at the time. If you paid £35,000, that leaves a £7,000 difference. Even on a used vehicle, that is not a small amount. Used Porsche GAP insurance may be able to cover that shortfall, depending on policy terms.
Why GAP insurance can still be relevant on a Used Porsche
Depreciation still hits second-hand cars, so the risk of a financial shortfall remains. Porsches, even used ones, often sit at a higher price point than many other vehicles. This means any drop in value, even if it falls more slowly than a new car, can still result in a noticeable financial shortfall.
It can also depend on personal circumstances. For some, the initial purchase of a second-hand Porsche may still represent a significant sum. For others, it may not punch such a big dent in the wallet.
Used car prices are based on mileage, condition, age and, most importantly, market demand. If a car is written off at a time when interest in Porsche cars, or that particular model, is lower, then the insurer’s valuation may be lower than you expect or research. For these reasons, many drivers decide that used Porsche GAP insurance is relevant for them.
When is GAP insurance worth it on a used Porsche?
Ultimately, it comes down to your own personal circumstances. If you’re debating whether or not to buy GAP insurance, then it often comes down to how you bought the car and how much risk you are comfortable taking. This will be different for each individual.
Drivers who tend to lean towards getting GAP insurance are usually those who have financed the car and still owe a significant amount. For example, drivers who have opted for a small deposit and spread repayments over a long period may mean the outstanding balance doesn’t reduce quickly.
Drivers who don’t feel confident they will be able to pay a hefty bill at short notice may also lean towards taking out a GAP policy.
In contrast, drivers who paid outright or secured a short PCP agreement on an older model may prefer to take the risk rather than the additional cover. The driver may also expect to travel less than 3-4,000 miles. If drivers have gone down this route, they may experience less depreciation, and the potential shortfall may be smaller.
How does Used Porsche GAP Insurance Work?
New and used GAP insurance works in exactly the same way. If your Porsche is written off or stolen and not recovered, your comprehensive motor insurance will pay out the current market value. Don’t get caught out! You will only be eligible for GAP insurance if you hold comprehensive cover.
Depending on your policy terms, GAP insurance may then step in to cover the difference between that payout and what you originally paid or still owe on the car.
What type of GAP Insurance is Best for a Used Porsche?
Insureworks can arrange two different types of GAP insurance. Drivers who have a finance agreement and risk negative equity are best to consider return to finance GAP insurance. This focuses on clearing any remaining balance on your loan. This can help avoid a one-off lump sum payment or the monthly reminders.
Return to invoice GAP insurance is aimed at drivers who either buy the car outright or want to protect the amount they initially invested.
GAP Insurance Limitations to Keep in Mind
Don’t get caught out. GAP will only cover you if the car is written off or stolen and not returned. It will not do anything for general wear and tear, mechanical faults, or minor issues caused by a minor bump. Save that for your standard motor insurance.
There are also several boxes you need to tick in order to be eligible for GAP insurance. You must have comprehensive insurance, and any GAP cover depends on your main insurer accepting the write-off first. There may also be GAP limits depending on the car’s age and mileage. Check the policy terms first to ensure everything is as watertight as possible.
FAQs About GAP Insurance on a Used Porsche
We know it can sometimes be confusing, but we don’t want you to spend hours on life admin! Those days are well and truly gone. To summarise, we have created the following FAQ section, which contains the most common questions to help you try and make sense of it all.
Is GAP Insurance Worth it on a Used Porsche?
Working out and understanding whether Porsche GAP insurance is worth it for you depends on your personal circumstances. The following is a list of examples where drivers sometimes consider GAP insurance.
- The car is still relatively young and may still depreciate significantly
- A small deposit was made on the finance agreement, leaving a long-term lease
- That particular Porsche model or version of the car loses value more quickly than others
- The car was bought recently for a significant sum, and the owners want to protect the amount they paid for it if the car is written off soon after purchase
When Should Porsche GAP Insurance be Set Up?
Just like a Porsche, if you have decided to buy GAP insurance, then it’s best to accelerate quickly and get moving. Depreciation starts as soon as you climb into the car for the first time because an additional owner tends to reduce the value. Depreciation will continue to happen as you rack up the miles.
If your car is written off or stolen soon after purchase, there may still be a financial shortfall between your motor insurer’s payout and what you paid or still owe. GAP insurance may help cover some or all of that shortfall, depending on the policy terms.
Do I need Porsche GAP Insurance if I am Leasing the Car?
GAP is not a legal requirement, so there is no “need” to get a policy. But many drivers do consider getting GAP when leasing a used Porsche. If your leased car is written off or stolen, there may still be an amount due under your finance agreement after your motor insurer’s payout.
Paying for a car you only have memories of is not an ideal situation to be in. GAP may help cover some or all of that shortfall, depending on the policy terms.
Expert Insight
“Even with a used Porsche, the sums involved can still leave you exposed to a financial shortfall. GAP insurance can help protect your investment, especially if the car is written off earlier than expected.”
Nick, Insurance Specialist at InsureWorks
Wanting to Sort Used Porsche GAP Insurance?
Getting a quote for Porsche GAP insurance is quick and straightforward with Insureworks. There’s no jargon, and no faff. We will arrange cover quickly. All you need to do is answer a few questions about yourself and the vehicle.