UK drivers are facing a harsh financial reality when their vehicles are written off, with millions unable to afford a like-for-like replacement using their comprehensive insurance payout alone.
Alarmingly, 62 per cent of drivers would be unable to pay for a replacement of the same value, revealing a significant shortfall between what insurers pay and the actual cost of replacing vehicles.
Even more concerning, 65 per cent of motorists couldn’t afford a market-value replacement at all after receiving their insurance settlement.
With vehicle write-offs occurring more frequently than many realise, a quarter of UK drivers now admit they’re worried about the financial impact of losing their car.
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Experts have called on drivers to ensure their car insurance covers them in the event of an accident
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The financial gap is substantial, with 68 per cent of drivers receiving payouts below £5,000 after their vehicles were written off, while 38 per cent received less than £2,500 despite having comprehensive insurance.
Only a small minority fared better, with just 16 per cent receiving over £10,000 and a mere five per cent securing more than £20,000 for their written-off vehicles.
This disparity is creating widespread distrust in the insurance industry, with 42 per cent of motorists now holding a negative view of insurance providers.
Nearly half of drivers admitted they would struggle financially if they wrote off their car today, with the research showing a large gap in expectations versus reality when waiting for a payout.
A striking 63 per cent of motorists mistakenly believe they would receive the full amount they originally paid for their car after a write-off.
This misunderstanding about comprehensive insurance coverage is widespread, with nearly two-thirds of drivers thinking there would be no financial shortfalls with their policies.
Jason Allen, from ALA Insurance, highlights the severity of the situation: “Our research highlights how financially devastating a total loss can be for most drivers. Comprehensive insurance often falls short of covering the cost of a replacement, leaving motorists unexpectedly out of pocket.”
He further explained that many drivers are unaware of additional protection options that could safeguard them against these losses.
GAP insurance is designed to cover the difference between a comprehensive car insurance payout and what drivers originally paid for their car.
Despite its potential to solve the financial shortfall problem, awareness remains remarkably low, with only 35 per cent of UK drivers having heard of GAP insurance, according to the research.
Car dealerships remain the primary source of information about GAP insurance, cited by more than half of those aware of the product, suggesting many drivers are missing vital education about how they can protect themselves financially after a write-off.
Jason Allen encourages drivers to take action: “We encourage all drivers to review their insurance policies and consider whether they are fully protected against the unexpected.
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Drivers could be losing out by not having an appropriate level of car insurance
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“GAP insurance can be the difference between financial hardship and peace of mind after a total loss.”
With comprehensive insurance frequently falling short of expectations, experts suggest greater awareness of alternative protection options could help mitigate these concerns.
