Is GAP insurance worth it? [ANSWERED]

Is GAP Insurance worth it? Yes and no, it really depends on your situation. If you are considering a new car then the answer is nearly always yes, but if your car is used then – while you can get GAP insurance for used cars – it’s going to be a toss-up as to whether you want to buy it not.  It probably also depends on your attitude to risk, and whether you can actually afford the quote.

It’s a dismal unavoidable truth that on the off chance that you purchase a fresh  out of the plastic new auto, its esteem drops by a third when you drive it off the forecourt, and will fall by 40% in the primary year and up to 60% more than three years by and large, as indicated by the AA.

On the off chance that the auto is composed off or stolen, your safety net provider will pay out what it’s worth at THAT time – prone to be not as much as what you paid when you got it, particularly if it’s fresh out of the plastic new. This implies when you’re getting a substitution auto there’s a ‘hole’ between the sum your safety net provider pays and the sum you initially paid.

On the off chance that you purchase hole protection, this is the ‘hole’ it covers. Dealerships as a rule offer it and approaches are estimated amongst £100 and £300 for a long time of cover. Notwithstanding, hole protection should be taken with a huge squeeze of salt. This is on the grounds that:

Entire protection isn’t basic as your back up plan should ALREADY pay out for a substitution car. What’s more, if the auto is under a year old, it will be a fresh out of the box new car, or at least it should be – check the smallprint!

If your car or van is brand new, the Gap insurance is worth it. Of course we would say that as we compare Gap policies, but let’s be honest – how good are you at putting money aside?

Things being what they are, would it be a good idea for you to get hole protection and will you think that its valuable? Or on the other hand is it a sham item to maintain a strategic distance from? We clarify beneath precisely how it functions alongside advantages and disadvantages to enable you to choose.

 

You probably don’t need GAP insurance if…

  • You’d be happy with a replacement (not a brand-spanking new) car

    If you aren’t bothered by your car’s depreciation then there’s not a lot of point in buying gap insurance. Your car insurance will pay out for a replacement car so you’ll get a car that is like-for-like for what you had when it was written off or stolen (see our Cheap Car Insurance guide for tips on getting a cheap policy), so the only benefit of gap is that you’ll get back the original amount you paid.

  • Your car’s less than one year old and you have fully comprehensive car insuranceMost fully comprehensive car insurance policies offer ‘new car replacement’ during the first 12 and sometimes even 24 months for new cars, so if yours does and you’re still in this period you won’t need gap insurance.
  • You have a used car (although some with used cars do still buy it)

    If you bought a used car like the 9.7 million people who did in 2014 (compared to just 2.5 million splashing out on a new car, according to the British Car Auctions), gap insurance isn’t as useful. This is because a used car won’t fall in value at the same rate as a new car.

    On average, according to CAP, a three-year-old car’s value will drop 14% in the first year, 24% in the second and 33% in the third year. This is significantly less than the 60% average fall for new cars in the first three years. Therefore the gap between what you paid and what the insurer will pay you will be far smaller and the gap policy could be more or less useless.