New research has highlighted the risk of financial shocks amid confusion among motorists, and the role that one form of insurance could play – GAP insurance.
A nationwide study conducted by Viewsbank on behalf of data analytics company Consumer Intelligence has revealed misconceptions surrounding motor coverage. The December 2018 poll involved over a thousand car owners, a third (34%) of which expect their insurer to pay out the purchase price of the vehicle if it is written off or stolen.
It was also found that 78% who have bought finance believe that, in case of a write-off, the outstanding loan would be cleared either by their own motor insurance or that of the other driver.
“In reality car insurance covers the market price of the car at the time of the accident or theft minus any depreciation, leaving drivers to fund the shortfall for a replacement,” said Consumer Intelligence.
“So-called guaranteed asset protection – or GAP – insurance will pay the purchase price and cover any finance deals but Consumer Intelligence’s data shows just one in eight (12%) drivers took it out when they last bought a car.”
The firm is setting off alarm bells, given that 19% of respondents said they had claimed on insurance after a write-off or theft. Consumer Intelligence added that there are an estimated 384,000 cars written off in the UK every year.
Meanwhile of those with GAP cover, 2% purchased their policies independently and not through their car dealers, with pricing cited as a major factor.
“It is worrying that so many drivers are confused about what their insurance will cover in the event of a write-off or theft and particularly for those who have bought their car on finance,” commented Consumer Intelligence insurance pricing expert John Blevins.
“It is bad enough to suffer a theft or a write-off but having to also deal with financial worries about getting a replacement in the aftermath adds to the pain. GAP insurance can be very valuable, and it is a pity that motorists are put off buying it because they don’t trust dealers to offer them a good deal.”
A similar study previously found that only a tenth of UK motorists take out GAP insurance.