GAP insurance – what is it and what do you need to know?
If you’re anything like me, you probably don’t stress much about the dull, practical stuff like car insurance. I’m 18 – just passed my driving test, YES! – so I usually leave that sort of thing to my Dad (sorry Dad!). But as I’m learning more about being a driver, I thought I’d share what I find here, on my new regular blog slot – starting with a new discovery I just made: gap insurance.
Like any new driver, I love my car – a great little Ford Fiesta that my parents helped to buy – it’s safe, doesn’t cost much to run and I can get to my job easily. And as it’s so important to me, I figured it was probably time to start being practical, and understand all those less-fun but important bits of car ownership! I made a good start by looking into the sorts of insurance I need for my car.
Which leads me to my first tip (for fellow new drivers, and actually, everyone who owns a car): consider GAP insurance. I admit, I only knew about it because my Dad said to me, “Kate, it’s a sensible idea, this gap insurance thing.” Turns out, he was right, so here’s what I’ve found out.
What is GAP insurance anyway?
GAP stands for Guaranteed Asset Protection. So, if you’re unlucky enough to have your car stolen or so badly damaged in an accident it’s written-off, then GAP insurance covers the difference between what you, or your parents, paid for your car and the amount your insurer will pay out based on your car’s current value. You could find yourself totally skint and cancelling your summer festival or travel plans if your fairly new car is written off and your insurer only offers to pay you what it’s currently worth.
There are a few different types of GAP insurance to choose from, so check them out below and get the one that’s right for you.
- Finance GAP insurance – This helps pay off any outstanding finance if your car’s written off.
- Return to invoice – If your insurer only offers to pay you current market value, this tops up the payment to the same as what you paid for your car – win!
- Vehicle replacement – Covers the difference between what your insurer pays out and the cost of replacing your car with a new one. I found some great deals you can get on replacement cars if you take out this type of gap insurance!
- Return to value – Pays out the difference between your insurer payment and the value of your car when you bought it. This is top banana if you bought a used car.
- Lease GAP insurance – If you leased your car this helps pay off the contract and any fees.
It’s super-easy to understand once you’ve been through it all, and I now think it’s a great idea to protect the value of Frankie Fiesta (yes, I’ve named my car – doesn’t everyone?).
And a note on car value, for any of you who are like my mate Charlie, and into customising your car (Charlie’s got a black metallic paint job with a red stripe and logos, an added low trim, plus red alloys on his wheels): yeah, it looks awesome, but it can seriously affect the resale value, so GAP insurance could be even more important.
What you should think about for your GAP insurance
As I said, I rely on my car to get to work and hang out with my friends – I could not imagine asking my parents for lifts everywhere. I mean, that’s why we all want to pass our test ASAP, right? So GAP insurance makes sense to keep you on the road whatever happens. If you’re thinking about the details of a GAP insurance deal (or if like me you need a bit of explanation to understand all the options), why not do what I did, and nip down to your local Perrys dealership for a chat? Ask them to explain the following key points to you – these were really helpful for me to understand the policy I was getting:
- Policy length
- Value of your car
- Any exclusions
- How to make a claim
- How to cancel your policy
Your dealership will explain to you loads of other helpful things about your GAP insurance, like what the total cost is, how long the policy is for, etc. Trust me, it’s really easy to master when you have the experts helping you to understand it all, and the Perrys dealers are always happy to help.
And finally, for all my fellow new drivers: I know you just want to drive when you pass your test – I failed my first time, and after I passed second time, I couldn’t wait to get behind Frankie’s wheel at last! But don’t forget about the practical stuff like GAP insurance. Seriously, the protection it gives you if anything happens to your beloved wheels is well worth a tiny extra cost.