Most car dealerships will not let you drive off with your new car unless you have a valid insurance certificate in your hand. But there is also another party interested in your having valid, fully comprehensive insurance, if you have financed or hp your car.

However, they cannot ensure you are always covered, and assuming you do not renew the following year, or do not make payments on the policy if you elected to pay in instalments. It is however just as in your interests to ensure it IS covered. In the event of an accident, fire damage or theft, you will owe the finance company the entire amount outstanding with no insurance to help you out!!

For that reason, its probably wise to ensure the car is insured, even if you decide not to use it for several months.

Also consider agreeing guaranteed values with your insurer, so that you are not in for a nasty surprise if the worst should happen and you need to claim for total loss.

GAP Insurance

Another type of insurance which is relevant to this section is GAP insurance. GAP insurance basically makes up any shortfall in the pay out by the insurance company in the event of a total loss or theft claim. Some insurers have an agreed value policy where you will receive the value you have agreed with the insurer, but most are not like that. You will receive market value, which can be substantially lower and is quite subjective too.

There are a few types of GAP insurance now. Originally it seems the idea was to protect those who had leased cars, or financed them, and this would protect against a negative equity situation, meaning that you were responsible for the shortfall in the compensation from the insurance company. But having a loan against your car, hire purchasing the car, or having a leased car is not the only ones that can be covered by GAP insurance.

Ask your insurance provider of GAP what products they offer. Products include:

Finance GAP products: specifically for financed/leased cars.

Return to Invoice GAP products: specifically compensates to the purchase invoice value and specification. Vehicle replacement GAP products: will compensate so as to replace the car like for like, even if prices has increased for the car. This is the same as a New for Old policy, sometimes included in comprehensive insurance policies.

This type of insurance can be taken out on cars, vans or motorbikes.