Basically, it provides the coverage against the difference between market value of car and loan amount. But aren’t the two same that’s what you might be asking yourself. For example if you buy a car at AED 91,825. As soon as the car gets out of the showroom it’s cost get depreciated by almost 20%., so now your car worth is about AED 73,460.Now in case you met with an accident and you do have the full coverage including comprehensive and collusive coverage you will still get coverage on the present market value of the car and that is AED 73,460.So what gap car insurance is doing is that it’s covering the AED 18,365 difference.
There are different kinds of gap car insurance policies available in the market. Some provide covers in case of theft, losses and some don’t, so try to find what is exactly covered in the policy. Getting gap insurance is a good idea if you are buying a new car and if you think that you can’t cover the difference between the market value of the car and the loan amount. Also remember that older cars are not covered under it, in most cases.
