If you have comprehensive cover on your car then, in event of damage to your car following an accident, your car insurer will deal with your claim. If your car is ‘written off’ as a result of the accident your car insurer will, in most cases, pay you only the market value of the car at the time of the loss.
There are different types of GAP insurance (designed to suit particular circumstances). This is a simple example of how it can work:
- You purchase a new car for £10,000. Your car insurer ‘writes off’ the car following an accident a year later
- The insurance company pays out £6,500
- The remaining £3,500 is covered by your GAP insurance