GAP insurance

What is GAP insurance?

GAP is the abbreviation of Guaranteed Asset Protection, a type of car insurance that covers the depreciation or decrease in value of a vehicle.

If your car is written off, or stolen and not recovered, a comprehensive car insurance policy usually pays its market value at that time. That can be much less than what you paid for it. Whereas GAP insurance offsets the shortage between the two values after your comprehensive policy has been settled.

So GAP insurance doesn't replace your main car insurance policy. Instead GAP cover works after your comprehensive car insurance provider has settled a valid write-off claim, by bridging the difference between that payout and the level of cover provided by your GAP policy.

Types of GAP insurance explained

There are two main type of insurance:

• Return to Invoice cover, which may pay the difference between the insurer's settlement and your original purchase price.


• Vehicle Replacement cover, which may help if the cost of replacing your car with an equivalent new one has gone up.

Some GAP policies may also help cover an outstanding finance balance if your insurer's settlement doesn't repay what you still owe on the vehicle.

How does GAP insurance work?

GAP insurance works alongside your comprehensive car insurance, rather than replacing it. Here's how it usually works.

First, your main insurer decides the car is a write-off and offers a market-value settlement.

Next, your GAP policy provider checks the type of cover you bought and, if applicable, pays out the difference to cover the shortfall between the settlement and the car's original value.

So let's say you bought a car for £30,000. Two years later it's written off after an accident, and your insurer values it at £21,000. Without GAP that £9,000 depreciation is yours to fund, if you want a replacement car. With the right GAP insurance, some or all of the loss could be covered, depending on the policy terms.

What does GAP insurance cover?

The length of a GAP policy length ranges from around 2 to 5 years, but terms vary by provider. Eligibility depends on the age of the car, how and when it was bought, and the comprehensive car insurance policy you hold.

Common exclusions may include:

• Vehicles used for hire and reward
• Some modified cars
• Missed payments or claims where your main insurer declines cover

GAP doesn't cover repairs following an accident, routine damage, or third-party liability – those claims are covered by your car insurance.

The cost of GAP insurance depends on the car's value, age and the type of cover. You should assess a GAP insurance quote alongside the amount you could be left out of pocket, not just the price of the policy itself. Before deciding, our guide to salvage categories explains how insurers calculate a write-off.

But for many drivers GAP insurance does give extra reassurance. Combined with your comprehensive car insurance policy, it can protect you from the financial gap between your insurer's payout and the cost of replacing your vehicle.

Do you need GAP insurance?

Whether GAP insurance is right for you depends on your vehicle, how it was purchased, and how comfortable you are covering the potential cost of depreciation yourself.

For instance, if you've bought a new car recently, which could lose value quickly, or have outstanding finance that may exceed your insurer's payout if the vehicle is written off, then GAP may be worthwhile.

But if your car is older, has already depreciated in value, or you would be comfortable covering the difference between the insurer's settlement and the cost of replacing the vehicle yourself, GAP may be less relevant.