To figure out if GAP insurance is really worth considering, we must first understand what GAP insurance stands for and what it does.
What is GAP insurance, and why do I need it?
First things first, what does GAP insurance stand for? That would be Guaranteed Asset Protection, which means that this type of insurance will help you to make up the difference between what your car is worth at the time of purchase and the amount you owe on it at the time of an accident or theft. GAP insurance can be extremely useful if you get into an accident or have your car stolen before your car loan or finance has been fully paid off. Although GAP insurance is not a legal requirement, you should consider taking it out if you are worried about the difference between market (resale) value and what you’ve paid for the vehicle.
Should I buy GAP insurance for both new and used cars?
You should consider getting GAP insurance for both new and used car purchases. Although most of the depreciation usually happens within the first year of driving off the forecourt (around 40%), your car will continue depreciating after that. Factors that will affect the rate of depreciation are model, age and mileage. Although this will impact a used car, it will not be at the same rate as a brand new vehicle.
How do I calculate the cost of insurance?
GAP insurance is typically calculated on the cost of your vehicle, so the higher the purchase price, the higher your premium will be. Most insurance companies will provide additional benefits, like your excess payment or personal protection cover. You also need to consider how long you would like your cover to last. To ensure that you don’t overpay for GAP insurance, you should compare quotes before buying coverage. Also, don’t forget about deductibles—these variables can dramatically impact your out-of-pocket expenses and could change how much you really pay in a worst-case scenario. Take a look at this post to see some example calculations of how to work out the cost.
Where can I buy GAP insurance?
You can buy GAP insurance from car dealerships, Insurance Providers as an add-on, Insurance Brokers and specialist providers.
At Dynamo Cover, we offer 2 types of GAP Insurance – Return to Invoice and Outstanding Finance. Read more about different types of covers in this post.
Can I get GAP cover for all makes and models?
Most insurers will provide cover for most makes and models. However, you should be able to see the list of exclusions on their websites. Some companies will only cover vehicles up to a certain value, whereas others will be able to provide GAP insurance for specialists cars.
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