Car Depreciation Insurance

Car Depreciation Insurance 

Car depreciation insurance is designed to protect you from any financial shortfall or difficulties should your car be written off. When you buy a car, its value will depreciate over time. This loss in value can be due to things like wear and tear. Should your car be written off, your standard vehicle insurance policy will pay at the current market value of the vehicle. Without car depreciation insurance, the shortfall between your insurance payout and your loan amount or lease agreement is your responsibility. 

To save yourself from the shock of having to personally settle the remainder of your loan for a written-off car, our comparison platform Quotezone.co.uk is here to help. We let you quickly and easily find the coverage and protection that you need. Without vehicle depreciation insurance you may find it difficult to replace your old vehicle with an equivalent new car if it is written off. 

What exactly is car depreciation insurance, and why might I need it? 

Car depreciation insurance or Guaranteed Asset Protection (GAP) insurance provides coverage for the value depreciation that occurs after you buy a car. 

When you buy a car, it’s value immediately starts to depreciate. Car depreciation insurance covers the gap between the original purchase price and the current market value of the vehicle. In the event of a total loss due to an accident or theft, GAP insurance helps prevent financial loss due to depreciation. It assists you in either paying off the remainder of your car loan or your lease agreement. This allows you to replace the lost car with a new car of similar value as the original purchase price of the old car. 

What is zero depreciation car insurance?

Zero depreciation cover is an add-on option with some insurers for their comprehensive car insurance policies. It protects you against the depreciation of any repairs or replacement parts should you need to make a claim. Whilst the value of your car will naturally depreciate, a zero depreciation car insurance policy can cover you for the full cost of the replacement parts for your car.

Is vehicle depreciation insurance a legal requirement in the UK? 

No, car depreciation gap insurance is not a legal requirement in the UK. 

Insurance for car depreciation provides additional protection, bridging the gap between the original purchase price and the current market value. It is taken out to support your standard car insurance policy in preventing financial loss. Whether you opt for vehicle depreciation insurance depends on your preferences, financial situation, and your risk tolerance. 

Is it true I can only take out this policy if I bought the car via HP or PCP financing? 

No, this is not true. Regardless of what financing options you use to buy your car you can purchase and benefit from vehicle depreciation insurance. People who buy their cars through HP or PCP financing can typically benefit from taking out insurance for car depreciation. This group will most likely have the largest gap between their original purchase price or loan amount and the car’s depreciated market value. 

However, even if you bought your car with cash, you can still opt for the financial protection vehicle depreciation insurance provides. This is particularly useful to people who bought their cars new or own a specialist or high performance car.  

Is this type of policy different from GAP insurance? 

GAP insurance and car depreciation insurance are essentially the same type of insurance. The only difference is that GAP insurance is a blanket term that could apply to any type of vehicle. Car depreciation insurance will apply specifically to your car. 

However, both protect against financial losses due to the depreciation of a vehicle’s market value. They both bridge the gap between the purchase price or loan amount and the current market value of the vehicle. 

How much does car depreciation insurance cost, on average? 

Due to the individual nature of the factors considered when giving GAP insurance premiums, the cost of car depreciation insurance can vary significantly. 

Factors like the car’s value and term of coverage are applied to an individual policyholder on a case-by-case basis. This results in a unique risk profile for every policyholder. Individual costs for vehicle depreciation insurance will therefore be varied. 

At Quotezone.co.uk our insurance comparison platform can assist you in finding quotes for car depreciation insurance from multiple insurers. Having multiple options in one place can save you time when you are investigating insurance costs. Getting quotes from a large number of insurers can ensure you make informed choices and do not pay over the odds for car depreciation insurance.  

How is the cost of car depreciation gap insurance calculated? 

Insurance companies consider a wide range of risk factors when determining the costs of car depreciation gap insurance. 

Car depreciation insurance cost is typically calculated using the following risk factors: 

• The value of the vehicle being insured. 
• The coverage level selected. 
• The amount of the loan or lease for the vehicle. 
• The length of time you need the coverage. 
• The deductible and exclusions of the policy. 

Does the value of my car have an impact on the cost of depreciation insurance? 

The value of the car being insured does indeed have a big impact on the cost of car depreciation GAP insurance. 

Typically, the more expensive the vehicle is the higher the premiums for car depreciation insurance will be. This is due to increased risk to the insurer. The more expensive the vehicle the higher the potential for depreciation. This causes the gap between the purchase price or loan amount and the current value to increase. The bigger the gap the greater the potential payout for the insurer will be in the case of a total loss. 

Does my location affect how much I’ll have to pay for a car depreciation policy? 

Yes, your location can influence the cost of car depreciation insurance. However, vehicle depreciation insurance is focused on the relationship between the purchase price or loan amount and the current market value of the vehicle.  

The most significant contributor to the cost of car depreciation insurance at a particular location is the crime rate. A high crime rate in an area can increase the cost of car depreciation insurance. 

Will my age affect the cost of insurance for car depreciation? 

Yes, your age can affect the cost of your car depreciation insurance. Although not to the same degree as, for example, standard car insurance. 

The age group that will experience the greatest effect of their age are young drivers under the age of 25. This group are considered the least experienced drivers with the shortest driving record and insurance claims history. They are also statistically the most likely to be involved in an accident. 

Do insurers use the same risk factors to calculate the cost of car depreciation insurance as they would for a normal car insurance policy?  

Car depreciation insurance and normal car insurance share some common risk factors like the value of the vehicle. However, normal car insurance is designed to cover a wide range of scenarios and situations, and the risk factors considered reflect this. 

Car depreciation insurance is focused on providing coverage for the difference between the purchase price or loan amount and the current market value of the car. Therefore they will give different weight to the risk factors considered when compared to standard car insurers.  

What’s the best way to compare car depreciation insurance? 

In the last few years, making car depreciation insurance comparisons has become much faster and easier with the use of comparison websites. 

Our platform Quotezone.co.uk is designed to help you find a broad range of quotes from many of the leading insurers in the UK. Our site is free and very easy to use and is streamlined to find the insurers you need to protect you against the value loss of your car.  

What happens if my car is written off and I don’t have depreciation insurance? 

If your car is written off and you don’t have car depreciation GAP insurance you could face financial consequences. 

Your insurance company will assess the value of your car at the time of it being written off. The settlement they offer you will be based on the actual cash value (ACV) of the vehicle at that time.  

If the insurance payout is less than the amount you owe on your loan or lease then you will be responsible for the shortfall. You could find yourself paying off a car you no longer have or having to significantly downgrade to get a replacement vehicle. 

Are there specialist car depreciation insurance brokers I can speak to about my insurance requirements? 

Yes, there are specialist car depreciation insurance brokers that are available.  

However, if you want to review a broad range of quotes from many different insurance companies then we suggest a different approach. 

Using our insurance comparison platform Quotezone.co.uk can give you access to trusted GAP insurance providers from across the UK. Often brokers are limited with which insurance providers they work with. At Quotezone.co.uk we endeavour to bring as many insurance providers as possible.  

Will I get a cheaper policy from a broker or from a price comparison site? 

If you are looking for cheapest car depreciation insurance, we suggest you visit Quotezone.co.uk. Shopping around is well regarded as the best way to source the most competitive insurance rates. 

Our platform Quotezone.co.uk is designed to supply you with an unbiased list of many different insurers. This allows you to gather a wide selection of cheap quotes online, helping you to find a competitive option that suits your needs.