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Gap insurance is relevant for new cars
16 June 2008
Motorists should consider gap insurance when buying a vehicle as new cars depreciate rapidly in value, according to a car magazine.
Gap insurance covers the difference between a car's original market value and the insurance payout in the case of a write-off or theft and this payment can be used to finance the purchase of a new vehicle.
Tom White, spokesperson for Auto Trader, said: "The newer and higher value of the vehicle, the greater the depreciation will potentially be and therefore Gap will have greater relevance."
Car dealers are likely to charge a high commission for Gap insurance so motorists should shop around for a better deal, claims Auto Trader.
"We'd always recommend some element of price comparison, but also benefits comparison – there are a number of different Gap type products so cover will vary considerably," said Mr White.
One average a new car loses 40 per cent of its value after one year, according to the Automobile Association (AA).
