Whilst there are different types of GAP policy available, in the main most people purchase ‘Invoice GAP’ insurance.
In the event of your vehicle being stolen and unrecovered or is written off after an incident; it covers the difference between the amount you paid for your car and the amount paid by an insurance company for its value at the time of the incident.
A new vehicle’s value will drop, or ‘depreciate’ significantly in the first 3 years of its life. How much a car depreciates depends on lots of things such as the model of car, how old it is, how many miles it’s covered and the condition it’s in. The value can drop by as much around 50% – 60% over the first three years.