Gap Insurance

Buying a new car is very expensive and can cost anything from six thousand pounds to a million pounds.  It doesn't matter what sort of new car anyone buys and how much it might have cost it will lose a third of its value straight away.  A car that might have cost £10,000 before being taken out of the showroom might only be worth around £7,000 the following week.  Not many of us can even afford a new car so look for a good second hand car.  By Law all cars on the road must be covered by at least third party insurance.  This means that should the car owner have an accident or an accident that involves a third party then they are covered by insurance.  Third party fire and theft insurance will cover for if the car catches fire or sets some other person's car on fire.  If the car is stolen then it will be covered by the insurance for its current value at the time of the theft. Also if the car has to be written off for any reason the insurance will only cover its current value at the time of the incident.  Fully comprehensive insurance will cover almost everything such as a broken windscreen to protecting the no claims bonus.  However, it will not cover the value of the car at the time of purchase.  

Because of this some people are taking out Gap Insurance as a means of protecting the depreciation of their car.  Gap Insurance makes up the difference in value between when the car was purchased to its current value.  This means that should your car be stolen or written off it is possible to buy a similar car.  Gap insurance will usually cover a car up to 7 years old which certainly helps particularly in the current financial climate.  Buying Gap Insurance is easy and by going on-line it is possible to get a number of quotes from the comparison web sites. Although you have to pay extra to take out Gap Insurance to cover your car value, it could save you losing thousands through car depreciation. Because of the current market more motorists are taking advantage of this extra Gap Insurance.  This gives them peace of mind knowing that they will be able to claim back the full value of their car should the worse happen.

Summary

As the value of cars depreciates so quickly many motorists are taking out Gap Insurance as a means of protecting their cars value. Insurance Companies will only pay out on what a car is worth at the current time not what it was originally purchased for.  Gap insurance is to cover the difference between the two figures