Do you need GAP insurance if you have comprehensive insurance?

The world of car insurance is not the easiest subject to master. With words like third party, excess and comprehensive it can be difficult to understand exactly what type of coverage is best suited for you and your vehicle. GAP insurance has been around since the 1980’s but what is it and do you need it if you already have the highest level of car insurance?

Your expectations for what would happen are one of the biggest things to take into account when trying to decide whether GAP insurance is right for you. If you know that you would want the finance to be paid off, or that you would want a brand new replacement car then GAP insurance would be beneficial. 

What is GAP Insurance?

GAP insurance can be beneficial when you are buying a brand new car as it will cover the gap between the amount that you purchased your car for and how much your insurance company would be willing to pay out in the event that your car is deemed to be a write off or if it is stolen and declared unrecoverable.

It is widely known that cars depreciate rapidly in their first three years and you could quickly find yourself losing both your car and a lot of money. 

What is Comprehensive Insurance?

Comprehensive insurance is the highest level of car insurance that you can obtain. It is a popular choice among drivers.

Whereas with third party insurance only damage to another person’s property or injury to another person is covered, with comprehensive insurance you are covered for – 

  • Damage to another person’s property or vehicle
  • Injury to another person
  • Injury to yourself or your passengers
  • Damage to your own vehicle
  • Fire damage – either accidental or arson
  • Theft
  • Chips & scratches
  • Malicious damage
  • Accidental damage

Do I need both types of insurance?

You do not need to have both although they both cover you for different eventualities.

Having GAP insurance can be an extra safety net especially if you are buying a brand new car or you are purchasing a car using a finance loan. If circumstances occur where you have finance against your car and after an accident your insurance company declares it to be a write off, by having GAP insurance the outstanding loan balance would be paid off, ensuring that you are not left out of pocket. 

Example – 

  • Your new car cost £20,000 
  • Current market value is £9,000
  • Your fiance amount currently stands at £16,000

You can clearly see here that you would be out of pocket. With GAP insurance the amount that you still owe the finance company would be covered. 

Although comprehensive insurance is the highest cover you can get with car insurance you will only be paid, by your insurance company, the amount that your vehicle is currently valued at. 

I don’t have comprehensive insurance. Can I still have GAP insurance?

Unfortunately no. Although you can have comprehensive insurance without GAP insurance you cannot have GAP insurance without Comprehensive.

If you have third party or third party-fire & theft, you are unable to have GAP insurance

I’m not sure if I need GAP insurance. How can I decide?

Whether you would benefit from GAP insurance all depends on what car you are buying, how old it is and what your expectations would be if the car was written off by your insurance company. 

All cars lose their value quickly, however some models lose it much quicker, for example a Citroen C-Zero depreciates much quicker than a Audi Q5. There are three main points that will decide how much value your vehicle will lose – 

  • The model
  • The age of the car
  • How many miles it has done

Your expectations for what would happen are one of the biggest things to take into account when trying to decide whether GAP insurance is right for you.

If you know that you would want the finance to be paid off, or that you would want a brand new replacement car then GAP insurance would be beneficial. 

NOTE: Do remember that you will only be able to claim against your GAP insurance if your car is declared to be a write off or if it is stolen and unrecoverable. 

If your car is damaged in an accident but is repairable you will need to claim against your comprehensive car insurance

To help you make your decision you can either speak to the car dealership at the time of purchasing your new car or use one of the many price comparison websites to compare different prices and each of their benefits and limitations. 

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