Everyone knows your new car drops in value the moment you drive it off the forecourt, at which point it can be worth less than the outstanding finance. Indeed, statistics show that cars typically depreciate by between 40% and 60% in the first three years.
So, if your car is written off in an incident early in its life, the insurance value is often less than the remaining finance. Step forward GAP (Guaranteed Asset Protection) insurance, which will pay the difference between the actual cash value of the vehicle and the outstanding balance on your lease.
Around 375,000 vehicles are stolen every year, which is equivalent to one every two minutes. There are also more than 230,000 road traffic accidents that may result in an insurance write-off.
Is GAP insurance required?
No. Most lending companies demand fully comprehensive insurance but not GAP insurance, so if your car is written off and you don't have GAP insurance on your policy, you'll have to pay the difference between the insurance value and the outstanding finance.
How do I proceed with GAP?
Most dealerships can supply GAP insurance as an extra to your lease. Ask for a quote and your dealership contact will be happy to assist you. GAP is usually a single payment and will cover you for the term of your lease.