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GAP Guaranteed Asset
Protection - Should
I Purchase GAP Car Insurance?
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Should I Purchase
GAP Car Insurance?
GAP - Guaranteed Asset Protection -
insurance covers you for financial loss in the event that your car is
stolen or in an accident and is subsequently written off by insurers.
GAP car insurance covers the difference between what a car is really worth (the trade value) and any finance
still outstanding on it. This makes
GAP insurance an attractive
prospect to someone driving off the forecourt in his or her brand new car. This
is due to the fact that new
cars have the
highest rate of depreciation.
Considering the number of accidents each year and the fact that most stolen cars end up written off or vandalized, there is a market for GAP car Insurance.
However, this would only be in the case where the
owner of the vehicle owes more than it is worth. This might be so if the
initial deposit was small, if the car's depreciation is high (for example on
new cars), or if there is a high interest rate on the car loan.
GAP car insurance also has its place in car leasing as many lease
contracts require it. This is because under lease agreements, the person
leasing the car is liable for the cost of the car if it is written off or
stolen. Car lease payments are often a lot lower than car loan repayments and
therefore the shortfall between the value of the car and what has been paid can
be significant.
GAP insurance comes into its own for
those who will owe more than the value of their car for an extended period or
for people who are
leasing a car. However, it is a good idea to shop around if
you are considering
GAP car insurance cover, as the package the dealer may
be offering could come at a higher premium than elsewhere.
