GAP INSURANCE COVERAGE

Gap (Guaranteed asset protection) insurance covers the shortfall between what your motor insurance company will pay out and the amount you actually paid for the car. This should give you enough money to buy another car of the same value, or at least pay off a finance company if any money is still owed on the car. If you purchased the car with cash, of course, this wouldn't be an issue.

The question of whether Gap insurance is worthwhile is a difficult one. You could argue that the only way to find out is by knowing the risk. What percentage of cars are, in truth, stolen and not recovered or indeed written off entirely within the first three years of purchase?

Statistics regarding this information are hard to come by and even details which are available can be conflicting. The online insurer, Excite claims that half of all stolen cars are not recovered. Car-Finance.net, on the other hand, says the figure is one third. If you rely on the government's car theft index (albeit for 2004), it is older vehicles - cars aged 11-15 years that are in the highest risk category of being stolen. Apparently, more than 50 per cent of all cars stolen in the UK fall into this category.

If the GAP insurance obtained by insurance company under the individual auto policy then must have to deal with state insurance regulation agency for filling the premium. The premium is paid as complete auto insurance coverage.

In many instances this insurance will also pay the deductible on the primary insurance policy. The GAP policy offered at auto dealership at comparatively low cost add on that can be put into the car loan which provides coverage for the duration of the loan.

The car owners presume if their car is completely demolished they will get the complete amount. But it is not true, that's why the car insurance company select the GAP insurance to get the physical damage.