Little-Known Car Insurance Benefit Could Save Drivers £5,000
Drivers who have financed or leased their vehicles may be eligible for a hidden car insurance benefit that could save them thousands of pounds if their car is written off. Guaranteed Asset Protection (GAP) insurance has seen payouts skyrocket from £1,600 in 2021 to nearly £5,000 this year, making it an increasingly valuable financial safety net.
The Financial Conduct Authority has revealed that claims on GAP insurance are extremely rare, with the average driver making a claim only once every 300 years. This statistic highlights the low probability of needing GAP insurance while also underscoring its potential value when circumstances require it.
For drivers who have taken out finance or lease agreements on their vehicles, GAP insurance can be a crucial financial protection. If a car is totalled, standard insurance payouts are based on the vehicle’s current market value. However, if the outstanding loan or lease amount exceeds this value, drivers are left with a financial shortfall. GAP insurance covers this gap, preventing drivers from being left with debt on a vehicle they no longer possess.
The importance of such financial protection measures is highlighted by recent initiatives to remove older, polluting vehicles from London’s roads. The ULEZ scrappage scheme has successfully removed over 53,000 vehicles, with 35,094 cars and 17,964 vans either taken off the roads or upgraded to ULEZ-compliant vehicles. TfL’s Director of Strategy, Christina Calderato, praised the scheme’s success in reducing harmful emissions and improving air quality.
As the cost of car insurance continues to rise, drivers are seeking ways to manage their expenses. GAP insurance represents one potential cost-saving measure for those who have financed or leased their vehicles. By understanding the benefits and limitations of GAP insurance, drivers can make more informed decisions about their financial protection in the event of their vehicle being written off or stolen.
