How long is GAP insurance valid for?

Buying a brand new car can be an amazing experience as you drive it off the forecourt. However for those of you that have an accident within the first three years of owning your new car or if you are the victim of theft then you could very quickly be without a car and out of pocket.

Many new car owners choose to have GAP insurance alongside their comprehensive insurance to give them extra security should these scenarios arise but what is GAP insurance and how long are you covered for? 

Most GAP insurance policies are valid for three years as this is the time in which they are most beneficial to the policy holder.

What is GAP Insurance?

GAP insurance is a separate policy to your comprehensive insurance. Whereas comprehensive insurance will pay out the current value of the car in the aftermath of an accident or if your vehicle is stolen, GAP insurance will cover the difference between what you paid for your car and what your insurance company is willing to pay out. 

Why is GAP insurance beneficial when buying a new car? 

Although you can obtain GAP insurance on a used car, usually if it is under seven years old, the benefits may be less. New cars depreciate quickly within their first three years, losing up to 60% of their original value.

If your car is deemed a write off or unrecoverable within those three years you will find that what your insurance company is willing to pay out is a lot less than what you purchased your car for.

If you obtained finance to secure your car then you may still owe a lot to your finance company which your comprehensive insurance will not cover in full. 

There are several types of GAP insurance depending on your needs – 

  • Finance GAP Insurance This will cover the amount that you still owe to your finance company after your car is written off. 
  • Return to Invoice GAP Insurance This will bridge the gap between the amount that you purchased your car for and the current value of the vehicle. 
  • Vehicle Replacement GAP Insurance This will cover the price of a replacement car in the exact model and with the same specifications, even if the car has increased in price. 

How long is GAP insurance valid for?

Most GAP insurance policies are valid for three years as this is the time in which they are most beneficial to the policy holder.

After the three years you are able to take out another policy, providing that the car is under a certain age. Your car will need to be revalued before another policy can be taken out. 

How do I obtain GAP insurance?

Many car dealerships offer GAP insurance although this may not be the cheapest option.

There are also lots of car insurance companies that now offer this cover so it is always advisable to shop around and compare prices and the different benefits that each policy offers. You can obtain quotes directly from these companies or use a price comparison website. 

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