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Customer Service & Help Lines Open Mon-Fri 9am-6pm, Closed Saturday & Sunday,

0800 195 4926

Customer Service & Help Lines Open Mon-Fri 9am-6pm, Closed Saturday & Sunday

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What is Gap Insurance?


Gap Insurance is a policy that runs alongside your own fully comprehensive motor insurance and protects you if your vehicle is written off.


Your motor insurance will give you the market value of your vehicle on the day of loss, with your gap insurance paying the difference between that figure and either the amount outstanding on finance or the invoice price, whichever is the higher.


This means that you have the purchase price back between your two insurance companies. If any finance outstanding is linked to your vehicle, this is cleared, and whatever is left is yours to spend as you see fit. - Simple and Easy!


Did you know that recent data from Churchill Insurance estimates that a vehicle is written off every 90 seconds in the UK alone?


So, whilst having your vehicle written off is not a foregone conclusion, it happens to many thousands of members of the general public, day in and day out, the length and breadth of the UK.


So why is having a vehicle 'written off' such a financial risk?


Please remember that if your vehicle is declared a total loss, then your own motor insurance company is only legally obliged to offer you the value of the vehicle on the day the incident happened. With some vehicles depreciating up to 50% and, in some cases, considerably more during that time, the amount you are offered could be a fraction of what you originally paid. 


We are not scaremongering; this is just a fact of motoring.


After all, no one would pay the same price for a brand-new car as they would for a vehicle that is three years old. So, we already accept depreciation; if you are buying a used vehicle, we welcome it.


The problem arises if the vehicle is written off.


Please let me show you what we mean and how depreciation could affect you.


This is a real-life example taken from a member of our team. (thankfully, they all, as you would expect, have gap insurance)


In October 2017, a team member bought a Mini Clubman S 2.0 Diesel Auto with a John Cooper Works steering wheel. - Stunning. It is a nice car, and this is the 3rd mini that this staff member has purchased.


They paid £26,320 on the road after discounts.


Today, the car is worth £11,360 - £13,350 (prices taken from Glass's Guide Jan 2020)


That means if the car were written off today, even if they had paid cash (in addition to getting the 'maximum settlement' from their motor insurance company), they would still have only £13,350 to replace the vehicle.


They would have lost £12,970, which we think is a lot of money to lose. Or potentially worse, if they had taken a form of finance, they could be left paying for something they no longer have or taking on extra financial commitments to clear any outstanding amount.


But depreciation is not just a problem (or a fact of motoring) for Mini's; it affects every manufacturer to a lesser or greater degree.


Another colleague (after saving for over 18 months) has finally bought his dream car, an Alfa Romeo Giulia Veloce 280. His car is his pride and joy, bright red with black leather, beautiful and responsive.


He bought the car for his 40th birthday in August 2019 and had managed to get a good deal.


The RRP was £38469, but he got it for £32188.69.


Today's value is between £ 25,420 and £ 27,650 in just five months. In the best-case scenario, that's a whopping £6768.69 loss.


Thankfully, again, he has gap insurance. As if not without gap insurance, if his car was written off, he could be left with a life-changing debt.


Our team members own cars ranging from luxury Mercedes-Benz to Citroen C1, and on every occasion when we (who should be used to talking about deprecation, remembering the job we do) spoke to the team member to ask about deprecation and what they thought their car was worth they were wildly and in some cases many of thousands of pounds out in estimations.


This is because it is human nature not to want to think about it. Everyone thinks they got a good deal; otherwise, you would not buy the car. Everyone likes to feel that they are one step ahead. But deprecation happens, and therefore, gap insurance exists.


Is it worth taking the risk with gap insurance prices from under £86 for three years?