When it comes to obtaining the proper coverage for your vehicle in the UK, it can be difficult knowing where to start. As well as third-party motor insurance (the bare legal minimum), you may be required to pick up business coverage as well as hire and reward insurance, especially if you drive for a living. With so many plans and providers out there, many drivers neglect to obtain GAP insurance, which can go a long way in saving you money when the time comes to change your vehicle – but what exactly is GAP insurance and why is it so important for drivers in the UK? Let’s dig a little deeper:
Driving costs increase
With UK drivers feeling the pinch amidst high inflation, a cost of living crisis, and rapidly rising fuel and energy bills, it’s never been more important to make savings and cut costs wherever possible. On top of the general cost of living, rising company car tax and road tax rates have left many UK drivers seeking more affordable alternatives when it comes to running their vehicles, whether that be for private or commercial use. One of the easiest ways to save the pennies in the current climate is by obtaining GAP insurance coverage, where you’ll be able to protect your investments and often recoup the full value of a vehicle once it’s time for a change. Essentially, this type of plan can help you to make significant savings later down the line and avoid unwanted auto expenses, but what does GAP insurance actually mean?
What is gap insurance?
The ‘GAP’ in GAP insurance stands for Guaranteed Asset Protection – in this case, the asset in question is your vehicle. Essentially, GAP insurance plans work by covering the difference (or gap) between the amount that your insurance provider pays out and the total value of a replacement car, if you need to make a claim for total loss. It’s worth pointing out that total loss claims are usually made when a vehicle is written off or stolen through no fault of the driver. Because the return you will see from most insurance claims will be less than the original sum you paid for a car (especially if the vehicle is older and prone to degradation), many drivers will often end up losing out if they have to make a total loss claim from their provider – by signing up with a return to invoice GAP insurance policy, you would protect your asset and make sure that you’ll be able to recoup the full value that you paid for the car. Other common GAP insurance policies include negative equity plans, return to value plans, finance/contract hire plans, and vehicle replacement plans.