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That’s the result along with precious peace of mind for the car owner whose troubles began a few months ago when his year-old, £16,400 Renault was written off after he hit a patch of black ice. Although most relieved he was ok himself, like many others in a similar predicament, the accident left him more out of pocket than he expected.
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Payment for his car had been a mix of deposit and finance. But after his insurance claim had been sorted and Thomas had settled the contract, he found himself £5,000 worse off.
Unless the car is brand new or a motor policy states otherwise, insurers will only pay current value, what a vehicle is worth at the time. In the first 12 months some estimates put depreciation from 15-30 percent and over first three years up to 60 percent.
The consequences don’t end there either as Thomas found. With less money to put down on another car because of the loss, a 0 percent interest option on a new finance agreement was not available and he was facing paying four percent instead.
Thomas had never minded the gap when it came to insurance but this could be the time we thought and he agreed.
But GAP (Guaranteed Asset Protection) cover as its name suggests stops drivers missing out through depreciation if their motor is written off or stolen.
Payment for his car had been a mix of deposit and finance (Image: Getty Images/Johner RF)
Unless the car is brand new or a motor policy states otherwise, insurers will only pay current value (Image: Getty Images/iStockphoto) var brightcoveBrandsafety=’4 Sport and specialist news – passed for ad targeting’
Total loss or combined GAP pays the difference between an insurance settlement and the original vehicle price paid or the outstanding finance balance. Return to invoice GAP pays the amount between the cost of a vehicle and a motor insurance settlement.
It needs treating with care. Don’t be hustled into an agreement. Indeed car dealers, who can sell the policies, must leave three days between giving the customer a quote and concluding the contract.
Expert Andrew Hagger of personal finance consultancy Moneycomms.co.uk advises: “Many fully comprehensive car insurance policies will provide a replacement new like for like vehicle in the first year, so Gap cover wouldn’t be worth it – but check with your insurer first to make sure.
“New cars can depreciate rapidly in the two or three years whereas used car tend to more slowly. As alway shop around first and compare costs and benefits.”
Among providers are Click4gap and Easygap, but Thomas has now chosen InsuretheGap.com.
“I paid £111 for 60 months covering £25,000 with a £250 excess,” he explained. “For my purposes it was the clearest and cheapest deal.”