Drivers who've made car insurance claim risk being 'financially devastated'
62 per cent of drivers would be unable to pay for a replacement of the same value, it has been revealed.
Motorists and drivers risk being 'financially devastated' after making a car insurance crash claim, it has been warned. 62 per cent of drivers would be unable to pay for a replacement of the same value, it has been revealed.
And data shows 65 per cent of motorists couldn't afford a market-value replacement at all after receiving their insurance settlement. The financial gap is substantial, with 68 per cent of drivers receiving payouts below £5,000 after their vehicles were written off.
And 38 per cent received less than £2,500 despite having comprehensive insurance. Jason Allen, from ALA Insurance, said: "Our research highlights how financially devastating a total loss can be for most drivers.
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"Comprehensive insurance often falls short of covering the cost of a replacement, leaving motorists unexpectedly out of pocket." He said: "We encourage all drivers to review their insurance policies and consider whether they are fully protected against the unexpected.
"GAP insurance can be the difference between financial hardship and peace of mind after a total loss." GAP insurance is designed to cover the difference between a comprehensive car insurance payout and what you originally paid for the car, therefore the cost of a replacement vehicle.
Many drivers mistakenly believe comprehensive insurance offers full protection in the event of a total loss. The report found that 63% of drivers thought there were no financial shortfalls with comprehensive policies, despite evidence to the contrary.
Worryingly, 49% said they would struggle financially if they wrote off their car today. Despite its potential to mitigate financial risk, GAP insurance remains underutilised. Only 35% of drivers have heard of it, and even among those aware, 85% have never purchased it.
Some 25% of respondents said they were worried about the financial implications of a write-off – a valid concern with the frequency this occurs.