What is Gap Insurance ?

Gap Insurance is an additional insurance package which can be optionally purchased by a car owner in order to provide protection from risks and scenarios not ordinarily covered by fully comprehensive car insurance policies

Gap insurance is not required in any other asset protecting insurance; it is only within the motor insurance market that there is a need for it.

In all other areas of the insurance industry, the word betterment is used; this means if an item is replaced under an insurance policy it is on a new for old, like for like basis throughout the term of the policy. This means for example if a two year old insured computer was damaged it would be replaced by a new one with a similar specification – the consumer would receive betterment and effectively benefit from making a claim. If the computer insurance worked the same way as a typical car insurance policy, the insurance company would send the claimant a two year old possibly second hand computer which would be far from acceptable.

It is standard and widely accepted that a car looses between thirty five and ninety percent of their value within three years of its manufacture, with the average loss said to be about sixty five percent. When these statistics are converted into pounds, car owners are set to lose a lot of money by purchasing a new car.

It is becoming increasingly popular for car owners to purchase extra protection in the form of Gap Insurance which bridges the gap between an insurance payout and the cost of a new car.

Types of Gap insurance

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