Motorists at risk because of inadequate car insurance cover

With fuel prices continuing to rise and a further hike in car insurance premiums expected this year, motorists are facing increasing financial pressure throughout 2011. Despite this, new research reveals that British motorists are at risk of losing an estimated £86 billion through inadequate car insurance cover.

The ‘Mind the GAP’ study conducted by independent GAP (Guaranteed Asset Protection) insurance provider ALA and You Gov, revealed that over three quarters (77 per cent) of British motorists are at risk of being left out of pocket if their car is written off or stolen, by not protecting themselves against any shortfall on an insurance payout.

GAP insurance protects motorists against a shortfall between the market value of the vehicle and any outstanding finance, or the invoice price or cost of a like-for-like replacement, should a car be stolen or written off.

Within the poll of 2,055 British adults, 10 per cent admitted having a vehicle written off in the past and more than one in 20 (6 per cent) admitted having a vehicle stolen. Despite this, one in ten (10 per cent) had purchased their current vehicle with a personal loan and 11 per cent on hire purchase, meaning many motorists could be vulnerable to costly repayments.

When it comes to purchasing GAP insurance, it seems Brits are failing to seek out the best bargains. Only two per cent of British motorists admitted shopping around for their GAP insurance, therefore missing out on cost-saving policies.

Simon England, managing director at ALA, said: “We are seeing more and more motorists coming to us to protect themselves against the ‘GAP’ in car insurance. However, our research has shown that, not only are many motorists still at risk, over half are not even aware of what GAP insurance is.”

“We found that British 25 to 34 year-olds were the group most at risk, as 16 per cent of them chose to buy their current vehicle with a personal loan and 14 per cent on finance, leaving them open to costly repayments,” he said.

“What’s more, it seems the majority (74 per cent) of those that have purchased GAP insurance at the same time as their car through a dealership instead of shopping around.”

With ALA’s GAP insurance cover starting at £74 for a three year policy, motorists can save up to 75 per cent on quotes offered from dealers and the company brings with it a wealth of experience in the car policy market.

ALA is an independent insurance broker, which creates bespoke GAP insurance policies underwritten by UK insurance providers. It is authorised and regulated by the FSA and its policies are covered under the Financial Services Compensation Scheme.

For more information on ALA visit ala.co.uk.