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What is gap insurance and why would I need it?

Guaranteed Asset Protection (Gap) insurance is a policy that covers the difference between what you paid for your car and the amount you would receive from an insurance company if the vehicle were stolen or written off.

How does gap insurance work?

Gap insurance was created because new cars lose their value extremely quickly. According to the AA, a new car will depreciate in value by 40% in the first year and up to 60% over three years on average. 1

For example, if you purchase a car for £10,000, it might cost you £2000 a year in depreciation and be worth around £4000 after three years. On a car worth £50,000, the cost of depreciation will be nearer £10,000 per year.

But if your car is stolen or written off, your insurance policy is only likely to cover you for what the vehicle is worth at that time. As a result, you’re going to get a lot less back than what you paid for your car. However, if you take out gap insurance, then you’re covered.

When gap insurance doesn’t offer significant benefit

Gap insurance can be taken out on both old and new cars. However, as depreciation on an older car will have slowed down, it’s generally not worth taking out this type of policy for an older vehicle.

Also, if you’re happy with a replacement car rather than a brand-new car in the event of something happening, then don’t worry about taking out gap insurance.

Some fully comprehensive car insurance policies offer ‘new car replacement’ for the first 12 months (some even provide it for the first 24 months). If your policy covers you in this way, then there’s no need for gap insurance.

When is gap insurance worth it?

If you’ve just bought an expensive new car, you may want to take out Gap insurance as your vehicle will depreciate in value in the first 12 months. Therefore, you could lose a significant sum if your car is stolen or written off not long after you bought it.

If you’ve taken out a loan to buy the car, through a finance company or other method, you may want the reassurance of having gap insurance. Although your insurance company will only pay out the value of the car at the time, you’ll still have to pay off the full amount of your loan. Gap insurance will help you take care of the loan and purchase a new car.

The choice is yours

As with all insurance policies, it’s about peace of mind and your attitude towards risk.

If you’re not worried by your car losing its value and are happy with the replacement your existing insurance policy will offer, then gap insurance is not necessarily for you.

But if your car is less than a year old and you hate the thought of not being able to reclaim what you paid, then it’s worth taking out this additional insurance.

Do you need advice on damage to your car?

At Smart Bodyshop, our vehicle body repair process starts with an assessment by a qualified in-house Vehicle Damage Assessor using an industry-regulated computer-generated appraisal.

We provide a full quotation of the work required that includes all charges, so you can be sure you’ll receive no unpleasant surprises on completion.

Why not bring your car in for assessment and our team will advise you on the best type of repair for your vehicle?

To find out more about our competitive prices and super-fast turnaround time, phone 01256 517230 or 0845 293 8111 or email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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What is the Euro New Car Assessment Programme?

The Euro New Car Assessment Programme (Euro NCAP) has been designed to offer consumer information on the safety of new cars.

While Euro NCAP can’t test every single new car, or its variants, offered by a manufacturer, it aims to provide a broad range of advice on a selection of popular models. Generally, these are new cars that have just entered the market, but it can also test cars already available.

How Euro NCAP works

Using a five-star safety rating system, the programme helps consumers and businesses to compare vehicles more easily. As a result of this, they can identify the safest car for their needs.

Euro NCAP carries out a series of vehicle tests to determine a safety rating. The tests are based on real-life accident scenarios that could result in injury to the car’s occupants or other road users.

Understanding the Euro NCAP star rating

The five-star rating system reflects how well the vehicle performs in Euro NCAP tests and is also influenced by the safety equipment the vehicle’s manufacturer offers.

Therefore, the number of stars represents positive test results – and that the safety equipment on the tested model is available to all consumers in Europe.

The star rating looks beyond legal requirements. For example, a car that just meets the minimum legal criteria would not be eligible for any stars. What this means is that while the car may not be unsafe, there are more safe options on the market.

Essentially, if you’re looking for a safe car, the more stars, the better. Here’s what each rating level represents:

5-star: Overall good performance in crash protection. Well equipped with robust crash avoidance technology.

4-star: Overall good performance in crash protection; additional crash avoidance technology may be present.

3-star: Average to good occupant protection but lacking crash avoidance technology.

2-star: Nominal crash protection but lacking crash avoidance technology.

1-star: Marginal crash protection.

How the Euro NCAP tests evolve

As new technology brings greater safety features, the tests are regularly updated, and the star levels adjusted.

This means that you should take into account the year of the test as this is essential for the accurate interpretation of the results. The latest star rating is always the most relevant.

For instance, the recent inclusion of emerging crash avoidance technology has changed the meaning of the stars considerably.

What dual ratings mean

Some vehicles will have two different star ratings. One is based on a car fitted only with safety equipment that’s standard on every variant in the model range throughout EU28. This rating reflects the minimum level of safety you can normally expect from any car sold anywhere in the EU. All cars assessed by Euro NCAP have this basic safety rating.

The next rating is based on a car with additional safety equipment that’s offered as an add-on option to the consumer. This extra safety equipment could increase the vehicle’s safety rating, but obviously only applies if the additional equipment is included on the car.

By comparing two different ratings for the same car, the buyer can easily see the benefits the additional equipment brings.

Discover how Smart Bodyshop can help your business

Smart Bodyshop is a leading car body repair specialist based in Basingstoke, Hampshire.

We offer state-of-the-art spray booth technology and Fast-Track equipment in our car body repair shop that aims to set the British Benchmark Standard. Our team of highly professional technicians streamline the repair process, working at optimal efficiency without compromising on quality.

To find out more about our competitive prices and super-fast turnaround time, phone 01256 517230 or 0845 293 8111 or email: This email address is being protected from spambots. You need JavaScript enabled to view it.

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Houndmills, Basingstoke

Hampshire RG21 6YH

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Im extremely impressed with the works carried out in my car. The staff were very friendly and helpful and I wouldn't hesitate to recommend them...
Carly O