Confused.com to offer car insurance covering depreciation

Wednesday, 08, Jul 2009 02:50

Confused.com is offering the first car depreciation insurance to protect drivers from falling car values.

The 'gap' insurance covers the difference between the insurance pay-out a driver receives from an incident and the purchase value of the car.

The average new car depreciates 60 per cent within three years and most insurers are only obliged to pay-out the market-value of the car at the time of a theft or write-off rather than the purchase value.

Will Thomas, head of motor insurance at Confused.com, said the reduction could prohibit a future purchase.

"Depreciation is more than an urban legend, with some cars dropping up to 60 per cent of their value by the end of its first three years," he said.

"This means that if a driver's car is a write off or stolen, they may only receive £4,000 despite paying £10,000 for it only a few years previously."

To qualify, the vehicle must have been owned no more than seven years. Cars can be owned outright, purchased with a finance or personal loan, or even on a lease agreement.