Have you ever wondered whether gap insurance is a legitimate, necessary option or just something salesmen use to get more money out of you? If you have been offered and are unsure whether you should accept it, read on.
How does Gap Insurance Work?
Firstly, let’s discuss what gap insurance is and how it works. This gap refers to the amount your insurer pays you and the amount you paid for the car in the event of an accident. A new car’s value drops by around a third as soon as it leaves the forecourt, therefore if a brand-new vehicle is being bought gap insurance is an option that makes sense to be taken into consideration.
Is it Necessary for your Business Vehicle?
The short answer: it depends on business type and finances must be taken into consideration.
There are certain businesses that would benefit from gap insurance but in most cases, it isn’t crucial. Normally, car insurance should pay out for a replacement car of the same age and condition in the event you write a car off.
Should you or Shouldn’t you get Gap Insurance?
Reasons you Might:
You want a New Car – If you are planning to buy a brand-new vehicle, rather than just like-for-like models, then gap insurance is a wise choice. If your business requires vehicles, the latest models are always a good look for every brand, therefore this type of cover is worth considering.
The car is Bought on Finance – Gap insurance is a viable option if you chose to pay back the cost through finance. Because in case of a written-off or stolen vehicle situation, you’ll only be offered the value they are currently worth and you’ll still be left paying off the amount you paid for them.
Reasons you Might not:
You’re buying used cars – If you’re buying a second-hand vehicle, the gap between what you paid and the insurer will cover is likely to be insignificant. Therefore, gap insurance may be a waste of time and money.
You’re Unconcerned with Brand-new Automobiles – If you’re satisfied with your existing vehicles and don’t mind having identical vehicles in the case of theft or major accident, gap insurance isn’t worth it.
You have Fully Comprehensive Insurance – At least within the first two years, comprehensive cover policies generally include new car replacement.
