What is GAP Insurance?

Most of us appreciate that vehicle values depreciate over time, in fact, from the moment you drive a brand new vehicle off the forecourt it has already dropped in value.

However, what most don’t appreciate is that if your vehicle is then stolen, or written off due to a road traffic accident, your main vehicle insurer will only pay you a claim value based on the depreciated value, known as the market value.

This means that you could be left owing a finance company more than your insurance company claim payout and you certainly are unlikely to receive a sufficiently large enough amount to purchase a new equivalent replacement – hence the GAP – a shortfall in insurance cover.

GAP insurance enables you to insure some or all of that shortfall and how you do that depends on a number of personal factors; even so, if for any reason your main insurer doesn’t settle your claim, then a GAP policy will not pay out either.