Asking the Experts. Is Guaranteed Auto Protection Actually worth it?
Guaranteed Auto Protection or popularly known as GAP Insurance, which is an add-on assistance to the vehicle owners and those who leases a vehicle. Offering guaranteed protection for your vehicle, GAP insurance is meant to cover the difference between the insurer’s valuation of the vehicle in case of a total write off and what the owner of the vehicle actually owe to the financier in terms of vehicle loan repayment.
Many people are confused about the concept of Guaranteed Auto Protection as to whether it is relevant and how to go about it. To help them out, here we publish the insurance expert’s answers for questions from a common man’s point of view.
Why GAP insurance is needed?
An estimated 600,000 vehicles are written off by the insurers in UK every year. The average depreciation of a vehicle in the first three years of purchase will be about 40 to 50%, which means what the vehicle owners are going to receive in case of write off will be about 50% of the purchase value. This will put a significant financial burden if there is a loan on the vehicle. To fill this gap, GAP insurance is needed.
Who all will find GAP insurance ideal?
All licensed drivers of any sex, location, any vehicle are ideal candidates for GAP insurance. For those who are having a loan over their vehicle, GAP is a must.
What types of GAP insurance are available?
There are three major types of GAP insurance policies as below;
1. Return to Invoice - Return to Invoice is a specific type of shortfall insurance to return the insurer the original vehicle price as per the purchase invoice.
2. Vehicle Replacement Insurance – This is meant to protect the insurer against any possible increase in the original invoice price. Invoice price may increase in various cases as when the manufacturer introduces an upgraded version of the vehicle model or if the government taxes are increased.
3. Contract & Finance GAP – This is to protect you against the financial agreements you have against the purchase of vehicle. These agreements include hire purchase or lease agreements.
Where to purchase GAP insurance?
It is not mandatory to purchase the GAP insurance from the vehicle dealer itself. In fact, you may find the prices a bit high also with the dealer insurance. You can search online for GAP insurance to find out really lucrative options as prices as low as £40 or so.
Moreover, dealerships can only offer GAP insurance to the vehicles they sell directly.
Online insurance providers can give shortfall insurance to anyone. The price of online insurance is also kept lower as they don’t have to maintain a building and staff cost as this process mostly happens online. However, ensure that the company offers insurance is a registered entity under Financial Compensation Scheme of the government.
You don’t have to fall prey to the up-selling tactics of the insurance providers and also there is no need to be in a haste to get a GAP insurance on the date of vehicle purchase itself. So, take your time to study all possible options and also feel free to ask them questions to clarify all your doubts before choosing a reliable provider and a perfect policy for your purpose.