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Gap Insurance for cars is also sometimes called GAP Coverage, Guaranteed Asset Protection (GAP), or Shortfall Insurance. With Gap Insurance, if your car is written off or stolen, you can top up your motor insurers' market value settlement to cover either an outstanding finance settlement or perhaps back to the price you originally paid for the vehicle.
There are different types of Gap Insurance as well. These can include:
Many people are under the impression that gap insurance is only for new cars. This is not true. Gap protection can also cover older cars too! If you have an old car that has depreciated or lost a lot of value, a Gap Insurance policy may be able to help even if your car was not originally purchased brand new.
Your comprehensive car insurance will normally only cover the current market value of your car.
The bottom line is that anyone that owns a car can benefit from Gap Insurance cover. If your car has depreciated in value then getting Gap protection may be exactly what you need to get back on track financially.
Most Gap Insurance policies will have a maximum age limit your vehicle can be on the day you buy the Gap Insurance policy. The age limit can differ from product to product.
Generally speaking, Vehicle Replacement Gap Insurance products are designed for new, or nearly new, cars. As such they often require that the vehicle is either new or nearly new, at the time of policy purchase.
Return to Invoice Gap is normally available for older vehicles. Many have limits of 8 years of age when the Gap policy is taken. However, at GapInsurance123 we can cover vehicles up to 10 years of age at the Gap Insurance policy purchase.
When you have a car that is older than 10 years, then you may find it more difficult to find Gap Insurance cover in the current market.
There could be an argument that an older car has already lost most of its value, so negating the need for Gap cover. However, there are a few compelling reasons why you may still consider buying Gap Insurance.
Nowadays, leasing or financing a car is so common that the age of the car does not necessarily make any difference when considering Gap Insurance.
You would expect nearly all vehicles to lose value over time. This means you can still face a significant shortfall on a financial settlement if the car is written off.
Gap protection can help protect against this if the vehicle is written off.
It is generally accepted that a car will lose most of its value in the first few years of its existence. After this point, the loss in value tends to flatten out.
But, the majority of cars will continue to lose value as they get older. This can create a shortfall between the current value and the original price paid.
Gap protection can help protect against this if the vehicle is a write-off.
When a car insurance company decides what to do, following an accident, they will assess the cost of any repairs as part of their investigations. They will compare the total cost of the repair against the current market value of the vehicle. If they deem the cost too high then the car can be written off.
The issue with older cars is that they are lower in value. The costs of repairs do not change, no matter the value of the vehicle.
So if you have £5,000 worth of damage on a £20,000 brand new car then your motor insurer will most likely repair the vehicle. If the very same £5,000 worth of damage occurs on an older vehicle then that vehicle will be written off.
Remember Gap Insurance can only be claimed if the car is written off following an accident, fire, theft, or flood.
Gap insurance for older cars can cover this shortfall in value, should it be needed.
The good news is that Gap Insurance on an older car, relative to a new car, should not be any different. The Gap Insurance cost generally is determined by the purchase price of the car and the length of cover you want.
So a £15,000 new car or a £15,000 8 year old car should be the same cost to get the same Gap cover for.
Gap Insurance is a personal choice, not a mandatory requirement. That said, many people could potentially benefit when they buy Gap Insurance for their car.
There may also be some people who may not benefit from Gap cover at all, particularly with an older car.
The obvious car owner who may not benefit from Gap Insurance is someone who has either a Classic Car motor insurance or an Agreed Value motor insurance policy in place. In either car, the car insurance provider covers the vehicle for an agreed, fixed figure instead of the reducing market value of the car. In these cases, any write-off will see a car insurance settlement based on the agreed value, so negating the need for Gap Insurance as well.
Another type of car owner who would not benefit from any form of Gap Insurance is one who would not be impacted by a financial loss if the car was written off or stolen. Perhaps you would not have any outstanding finance balance to worry about. Perhaps you are not concerned about the cost of a replacement vehicle. In this case, the Gap Insurance may not be for you.
It is possible that you could find Gap Insurance for contract hire cover on older cars, indeed GapInsurance123 will provide such cover for cars up to 10 years old. However, Contract Hire agreements tend to be on new, or nearly new cars, so it is unlikely you will need this type of finance cover.
In the current market for Gap Insurance in the UK, finding cover for vehicles over 10 years old is difficult. However, at that kind of age, a car with a good value is likely to be a classic and therefore qualify for a classic car insurance policy to a fixed value anyway.
Certainly, for the majority of used car owners, you should be able to access a Gap Insurer who will be able to provide cover. If you do look to buy Gap Insurance then be careful to check what the insurance covers on top of the comprehensive car insurance policy.
There are many types of Gap Insurance policies, so you may want to check a few details before buying cover.
These can include:
Is it a form of Invoice cover that can take you back to the price you paid for your car if it is declared a total loss by your car insurer?
Is it a form of Finance Gap that can only cover a shortfall between the motor insurer's settlement and the car finance company settlement?
This is the maximum the Gap adds to the motor insurance payout if the car is declared a total loss.
Many products are only eligible if you buy new and used cars from a car dealership.
This is where you use a finance deal to buy the car, and when you make a Gap Insurance claim you owe more on the finance settlement than the value of the car.
Is the company registered with the correct regulations to provide you with all necessary protections in the UK?
An easy check on the Financial Services Register.
You would expect this protection with many financial products in the UK but it is best to check you qualify for cover.
An example would be where you are required to fit an approved tracking device for a vehicle over a certain value.
So there you have it. A rundown of how to get Gap cover for older cars and what to look out for. We hope it helps. If we can assist any further please just let us know.