Last updated: 12 February, 2020
A new car loses its value, the moment you drive it off the forecourt. While the rate at which this happens depends on the make, model, mileage and condition of your car, the value can fall by 60% after three years, according to The AA.
Gap insurance is an additional cost above your regular car insurance and not included in your car insurance policy.
Car dealerships often offer gap insurance for between £100 and £300 as a flat fee for a three-year policy. With gap insurance, it’s possible to get a pay out that’s enough for a replacement car. If your car is less than a year old, it could mean getting a brand-new car.
There are several types of gap insurance, which include:
Which one you choose depends on how you bought your car, and whether or not you want a brand-new replacement if your car is written off. You can read more about how gap insurance works here.
Gap insurance isn't for everybody, but it can be useful in some circumstances such as:
If you financed your car using a personal loan, and it gets stolen, gap insurance is worth considering. This is because, while your insurance pay out the car cost at the time of theft, you still have to pay back the loan for the car's original value.
A gap insurance quote is like any other insurance quote. It gives you a brief overview of what the gap insurance policy will cost, what it'll cover and for how long.
Gap insurance is not a legal requirement like car insurance, but it can cover your car's loss in value if you write it off.
You can only make a gap insurance claim if your car has been declared a total loss (written off), by your car insurer first.
It depends on the make and model of your car, how much it costs to buy, what cover limit you need and how long you want a policy for.
Most policies will cover the excess you pay to your car insurer up to a set amount, for example £250.
Yes, some policies are designed for cars bought on finance or lease. They will pay off anything you owe after your car insurance has paid out.
No, you should compare gap insurance quotes online first because it is usually much cheaper when you buy direct from the insurer.