For many businesses across Northern Ireland, your fleet of commercial vehicles is an essential part of how you provide your clients and customers with expert services. With an average of 384,000 cars written off across the United Kingdom each year (Car Keys, 2019) it is strongly advised that your commercial vehicles are fully protected when out on the road, says Jacqueline McGivern, Key Account Manager at Autoline Insurance.
Unknown to some, conventional motor insurance does not afford enough protection to companies who use one of the new funding methods to purchase commercial vehicles. Whether it’s brand new or just new to you, buying a vehicle for your company is incredibly important. A lot of consideration can be taken before purchasing, yet once the front tyres of your vehicle leave the forecourt, it already begins to lose its value.
After the first year, a company vehicle will depreciate by about 40% of its original value, according to the Automobile Association (AA). What’s more, after three years, its value will depreciate up to 60%. This means that if your vehicle is involved in an accident, stolen or damaged, resulting in a total loss, your motor insurance policy would only cover 40% of the original cost you paid (the current market value), leaving you with a potential short fall. In addition, if the vehicle was purchased with finance, you may be required to continue making payments for a vehicle you no longer have.
Fortunately, there is something that you can do to prevent this rapid devaluation. Guaranteed Asset Protection (GAP) insurance provides your business with compensation equal to the original value of the vehicle when your company purchased it.
GAP insurance is designed to protect businesses against a financial shortfall in the event their vehicle is written off or declared a total loss. It is effective when a vehicle is damaged beyond economical repair as a result of an incident such as an accident, accidental damage, fire or theft.
It is because of situations like these that GAP insurance is beneficial and necessary to protecting your commercial vehicles, ensuring you receive your shortfall amount. There are three main types of GAP insurance; financial gap insurance, return-to-invoice insurance and vehicle replacement insurance. Insurers can also offer different commercial GAP policies based on your vehicle, such as for vans or pickups. It is best to discuss these types of commercial GAP insurance with your broker, to make sure your commercial vehicles are completely covered with insurance that best fits your business needs.
Purchasing a commercial vehicle can be difficult enough without having to worry about what could happen after you leave the forecourt. Thankfully, GAP insurance can provide you with peace of mind that no matter what may occur, you are financially covered.