What Is Gap Insurance?

When you buy or lease a car, you need to carefully think about the type of insurance you take out to cover the vehicle, otherwise you may risk being underinsured in the event that you’re involved in a road accident or other incident.

This video from Money Talks News explains what gap insurance involves, and situations in which this insurance option can be beneficial. Gap insurance can be particularly useful for people who are buying or leasing new cars, as this type of insurance covers the vehicle for its original worth, as opposed to the market value. When you consider that the value of a car typically drops significantly as soon as it’s driven out of the showroom, gap insurance can be an appealing prospect for cautious motorists who don’t want to end up out of pocket if the worst happens.

Gap insurance reduces a motorist’s financial risk, but may not be required by all drivers, especially as the risk of vehicles being totalled in their first year is relatively low. When taking out any type of motor insurance, it’s recommended to shop around and compare a number of options to ensure you’re getting the best deal for your money.

Gap insurance is also available for novated lease vehicles arranged through salary sacrifice agreements with employers, with the insurance cost being packaged as part of regular monthly lease payments. Find out more about novated leasing in Geraldton and Perth by contacting Fleet Network on08 6555 3854.