Company cars are an important asset for businesses in many industries whether this vehicle is to make deliveries or simply as means to get from A to B. It is important to protect your investment and one of the most important ways that a business owner can do this is with a GAP insurance policy.
What is GAP Insurance?
GAP insurance is an optional insurance policy that covers the shortfall between a comprehensive insurance payout if the car is written off and the amount outstanding on a finance agreement or the amount originally paid for the car. A comprehensive insurance payout will only be for the current market which could leave the business short by thousands of pounds due to depreciation, which can be as high as 77% after three years of ownership. This will allow you to quickly arrange a replacement vehicle so that your daily operation does not suffer.
When to consider buying GAP Insurance
You might want to consider GAP Insurance if you believe that you will not get the original value of your car from your original insurer. It is particularly worthy of buying if your car is leased or you have outstanding payments on a personal loan. In the worst possible scenario, if you lose your car for good due to damage and you think its value has depreciated, there will be a shortfall between what you will get from your insurance claim and the remaining amount of your payments for the car. This means you will end up paying more for a vehicle that’s not even on the road.
Why is it Smart for Businesses
GAP insurance is a smart investment for any motorist, but particularly for businesses. This is because you may be on the road more than an average motorist which increases the chances of an accident occurring. It is unfortunate, but write-offs occur frequently and even the best drivers can find themselves in accidents which result in the vehicle being declared a total loss. This is particularly true in older cars which can be written off over minor damage. In addition to collisions, a vehicle is also declared a total loss if damaged by fire or stolen and never recovered. Car crime is a big problem and criminals may target company cars if they are high-value.
Before buying GAP insurance, considering some factors such as the nature of the work, the frequency of the usage for the vehicle and the potential accumulated mileage. Even though an accurate estimate might be hard to prognose, having an estimate or at least a general idea should make the decision making process easier.
Peace of Mind
Having this protection in place will provide important peace of mind for any business owner. Depreciation could cost your company thousands of pounds if the vehicle were to be written off and these occur frequently. GAP insurance will allow you to rest assured knowing that your company finances will not be impacted if something were to happen to the automobile. Otherwise, it is down to you to raise the funds for any shortfall and this could be problematic if you are a relatively new company or if cash flow is an issue.
Overall, GAP insurance is a smart purchase for any business owner that has a company car or a fleet. It allows you to protect your investment and provide peace of mind knowing that you won’t have to pay a huge sum if the car were to be written off. Entrepreneurs need to make intelligent business decisions if they are to succeed and this is a great example of a smart investment