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How will Gap Insurance work for me?

Thinking about taking out gap insurance, but not sure how it works? Find out how PSA’s gap insurance can work for you.

Gap Insurance explained

 
It’s a sad fact that as soon as a brand-new car is driven out of the showroom, its value depreciates by as much as 1/3. If you are unfortunate enough to have your car written off in an accident or stolen, your car insurance company will only pay out the current market value of your car, meaning there is effectively a gap between what you paid when you bought the vehicle and the amount you are being compensated for by your insurance pay-out. Car gap insurance will ensure that you are not out of pocket should anything happen to your car, whether you have a new vehicle or are planning to take out gap insurance on a used car. This article will aim to define gap insurance and its benefits, so that you can find out how gap insurance will work for you.
 

Do I need Gap Insurance?

 
Gap insurance is not usually essential, in the same way as regular car insurance. However, it is recommended for many drivers. The peace of mind that comes with gap insurance as well as the protection of your own finances, definitely makes gap insurance worth buying for most drivers with cars less than eight years old. Gap insurance is particularly worthwhile if you have bought or are considering buying a brand-new car, as you will notice a depreciation in its value almost immediately, causing the amount your insurance company will pay out, to decline with it. As well as this, anyone who has paid little to no deposit on their current car can often end up owing more than the car is worth if the vehicle was bought on finance or a personal loan. These drivers run the risk of the car insurance company not paying out the full price of the outstanding loan – if you find that the auto loan amount exceeds the actual value of the vehicle then you should think about opting for gap insurance.
 

Car gap insurance will ensure that you are not out of pocket should anything happen to your car, whether you have a new vehicle or are planning to take out gap insurance on a used car.

Gap insurance – is it worth it?

 
Taking out a policy can protect the full value of your vehicle, but it is only natural to wonder whether or not gap insurance is worth buying. There are pros and cons to gap insurance and whilst you don’t need gap insurance in order to drive a car, it is definitely worth considering as a protective measure for your finances, in case of the unpredictable. Gap insurance could potentially be offered by a dealership when you purchase your car, but you may find that there are fantastic gap insurance policies and gap insurance quotes available online from a number of car gap insurance providers that will more than likely give you a better deal for what you are looking for. At PSA, we offer an indemnity cover of 30% of the vehicle’s market value up to €22,500 euros. PSA’s gap insurance policy does not need to be bought as part of a finance package and as a result is a unique product that can be bought as part of a standalone policy.
 
When deciding whether or not to take out gap insurance and whether gap insurance is worth buying in your situation, you should also look at how quickly your car could potentially depreciate in value (all cars depreciate at different rates) with the fastest losing up to 60% in a year. With insurance companies only paying out the market value at the time your car is written off or stolen, the faster your car is depreciating in value, the more important your gap insurance could be. Gap insurance on used cars is still worth considering as they do also depreciate in value, just at a slower rate than brand new vehicles. At PSA, a car up to 8 years old is still eligible for gap insurance.
  

Different Types of Gap Insurance

 
There are different types of gap insurance available on the market and some of the main types to consider are:
 
  1. Return to invoice gap insurance - the most common kind of gap insurance, this pays the difference between your insurer’s pay out and the amount you originally paid for your car.

  2. Return to value – Same as the above, this covers the difference between your insurer’s maximum payment and the value of the car when it was bought (ideal for anyone that has bought their car second hand).

  3. Vehicle replacement cover – Covers the difference between the maximum amount that your insurer pays out and the cost of replacing your car with a new car of the same model, make and spec.

  4. A percentage back – Another car gap insurance policy involves giving a percentage of the car’s value back to you in the event of your car being written off or stolen. This handy policy is the type that is offered by PSA – whereby 30% of the vehicle’s original value is the indemnity cover.
 

How much does Gap Insurance Cost?

 
The cost of gap insurance depends on the age, make and model of your car. For three years’ worth of cover, policies are often priced at around €100 - €300. You can enter the details of your vehicle into PSA’s ‘get a quote’ section to find out how much your gap insurance will cost through a personalised quote. If you choose not to pay up front from a dealer when you purchase your vehicle, third party cover from a provider such as PSA can often work out much cheaper.
 

Getting a Gap Insurance Quote

 
Getting a gap insurance online quote with PSA is super-easy and can be done quickly online. The quote will depend on a number of factors to do with your car, such as make, mileage and age. After you have received your quote, you can determine whether gap insurance is worth it for you. If so, you must ensure that your car is not more than 8 years old and is already insured for at least fire, theft and own damages. Once this is all in place, you can begin your purchase of a gap insurance policy which will not only bring you financial protection but also peace of mind. Click below to start you Quote.
 
 
 

Do yourself a favour. Put your mind at rest.

 
 
 
 
 

Do yourself a favour. Put your mind at rest.

 
 
Additional Reading
What is Gap Insurance? 03 May 2019
Different Types of Gap Insurance 30 April 2019
© PSA Insurance Solutions
PSA Insurance Solutions Ltd Reg No: C83206 is a limited liability company under Maltese Law, having its registered address at: MIB building 53 Abate Rigord Street Ta’ Xbiex Malta, Tel + 356 22 58 34 92. The company is enrolled to act as an insurance agent in terms of the Insurance Intermediaries Act, 2006 by the Malta Financial Services Authority (MFSA), Notabile Road, Attard BKR 3000, Malta.
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