As consumers rush to buy or lease new cars with the updated 2019 number plates, many are unaware of the risk of financial shortfall if their car gets stolen or written off. Despite rising vehicle theft in the UK, only between 10% and 12% of new car owners purchase GAP Insurance.
Brightside Insurance, a Top 30 UK insurance broker, has produced an infographic and guide to GAP Insurance, aiming to raise awareness about this issue.
Consumers don’t understand the need for GAP Insurance
In the event of theft or a write off, GAP Insurance – or Guaranteed Asset Protection Insurance – provides financial cover for a car’s original value at purchase.
Many UK consumers aren’t even aware of the potential need for this. Third-party research Brightside has gathered shows that UK consumers often overestimate the extent of their motor insurance coverage in the event of a write off or theft.
A third of UK drivers, at 34%, would expect their insurer to pay out the purchase price of their car, while 78% of drivers who purchased their car on finance would expect either their motor insurance or the other driver’s to cover the cost of the outstanding loan.
In reality, regular motor insurance will only pay out what a car is worth at the time of theft or accident. Given the rapid depreciation of cars – the average new car loses 20% of its value as soon as it’s sold– that could be much lower than the original value.
Without GAP Insurance, car owners could be left on the hook to repay loans for a car they no longer own, or could be unable to replace their vehicle.
Growing risk of financial liability – but GAP Insurance offers a solution
This risk is only increasing, as more people buy cars on finance, with the market more than doubling in the last several years.Combined with rising vehicle theft in the UK – Home Office figures show a 48.7% increase in the past 5 years.
Russell Bence, Managing Director at Brightside, says “GAP Insurance is a great way to protect the value of your vehicle, so, if the worst was to happen, you have the peace of mind you can replace your vehicle like for like and only for a few hundred pounds in most cases.”