Gap Insurance Coverage for Your Car
Gap insurance for your vehicle is essential if you want to avoid losing a huge amount of money if your car is never recovered after being stolen or hijacked, or written-off in a motor accident. In this article, we will have a look at Gap insurance coverage for your car.
Many vehicle owners are unprepared for this financial setback because they don’t realise that insurance companies base their settlement claims on the car’s Actual Cash Value (ACV) and not on the outstanding amount of money still owed on the initial purchase price of the vehicle.
It is important to remember that all vehicles depreciate in value – starting from the moment they are driven off the showroom floor.
Nationwide gap cover
That’s where Nationwide gap cover steps in. It cushions you for the difference between the insurance settlement pay-out and the outstanding amount that you still owe on the vehicle. Here are some facts:
- Gap cover adds further protection to your insurance policy
- Gap cover is an optional extra insurance policy
- Also, gap cover is particularly important for newer model vehicles because of the amount owed versus insurance settlement pay-out
- Gap cover protects you against a substantial financial loss should your vehicle be stolen, hijacked or involved in a collision
- The company financing the purchase of your vehicle may insist on you having gap cover in addition to your comprehensive insurance
Understanding comprehensive insurance
So many people think that if they have comprehensive vehicle insurance then they are fully covered for all claims. This is not true.
Understanding comprehensive insurance is easy. So this form of insurance will pay for the replacement of your vehicle but only up to the limit of your vehicle’s Actual Cash Value (ACV).
What is Actual Cash Value?
They determine ACV as follows:
- What the vehicle cost to purchase
- Minus depreciation based on the age, mileage and physical condition of the vehicle (other factors also come into play)
So the value of your vehicle can depreciate by thousands of rand in just one from the purchase date, leaving you with a financial nightmare to settle the outstanding loan amount.
Look at this example – Gap Insurance Coverage for Your Car
Cost of the vehicle on purchase date R350,000
Outstanding owed on purchase price R300,000
Actual Cash Value (ACV) of the vehicle R250,000
Policy deductible R5,000
Outstanding settlement due by you R245,000
Difference owed by you after insurance settlement R55,000
Gap Cover insurance will pay in that difference, leaving you free of debt
How to claim Gap Insurance Coverage for Your Car
Nationwide’s gap insurance is available to owners of vehicles that are no more than six years old. Apart from gap cover, Nationwide also underwrites comprehensive insurance policies and they have a no-fuss claiming process.
Fill in the form on this page and click on the “Get a Quote” button to get a Car Insurance quote
All info was correct at time of publishing June 5, 2018
