Warning as motorists could be losing up to £8.6bn on insurance claims

Motorists have been urged to make sure they have GAP insurance as new data revealed drivers are being offered a price below market value when their car is written off.

According to figures published by ALA Insurance yesterday (14 August 2023), car owners on average are being offered £286 below market value on total-loss claims.

However, the firm highlighted just 9% of motorists take out GAP Insurance, which covers the difference between the amount the insurers pay and what a driver would need to pay for a new or equivalent model.

As a result, ALA predicted that UK car owners without GAP could be losing up to £8.6bn.

“While it might not be your first priority when purchasing a new, used, financed or owned outright car or van, it’s certainly worth looking into to protect your investments in the event your car is written off,” Simon England, founder and managing director of ALA Insurance revealed.

Manufacturer 

For the research, ALA analysed 3,748 claims to show which car receives the lowest payout based on market value.

The data was provided by ALA’s underwriting partner AMS on claims from 2016 to present.

In terms of manufacturer, ALA revealed that Land Rover owners were the most likely to get the lowest payout when claiming, receiving average payouts of around £505 less than market value. 

Meanwhile, Mercedes-Benz drivers can expect to receive a payout less than £456.71 of the car’s market value, while BMW models were being valued at £395.18 less by insurers.

However, Skoda owners were the only drivers to get a positive financial offer at around £22 over market value. 

Honda, Volkswagen and Renault models were also seen to be some of the best investments with initial offers at less than £100 less than their market value.

“Our data shows the harsh financial reality of payments which are lower than fair market value for drivers. who invest in some of the most reliable and highly sought after vehicles on the roads,” England said.

“The stark contrast in the comprehensive insurance company offer versus market value highlights the importance of GAP Insurance.”