What is GAP Insurance?

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GAP(Guaranteed Asset Protection) insurance is an optional, add-on car insurance coverage that can help certain drivers cover the “gap” between the amount they owe on their car and the car's actual cash value (ACV) in the event of an accident.

For example, if you crash and write off your new car a year after buying it, your insurer will only pay out its current value. This is likely to be much less than the amount you paid.

Gap insurance can also cover any money you still owe if you bought your car on finance and your car insurance pay out is not enough to repay it. Most policies last for up to four or five years, or until you make a claim.

Types of GAP Insurance Policy

  • Vehicle replacement gap insurance: This covers the difference between the lump sum you get from your car insurer, and the amount your car would cost to buy new. This means you may get more than you paid to allow for the rising cost of cars.
  • Return to invoice gap insurance: This covers the shortfall between what your car insurance policy pays out, and the exact amount you paid for your car, and can be used for both new and second hand vehicles.
  • Return to value: This covers the difference between the insurance pay out and the market value of your car when you bought it. This could pay out more than return to invoice cover if you got a discount when you bought your car.
  • Finance gap insurance: This covers any money you owe a finance company if the insurance pay out does not repay your debt. This means you will have no car or cash after you claim, but what you owe will be paid off.

What is excluded from GAP Insurance?

Gap insurance may not cover you in certain situations, so it is important you understand what is excluded from the policy before you buy. Common exclusions include:

  • Any claim where your car insurer has not declared your vehicle a total loss
  • Any value added by modifications made to your car after you bought it, e.g. sound system
  • Your car insurance excess payment over a certain amount, e.g. anything over £250
  • Total loss caused by racing, rallying or any other competitive event
  • If you do not hold a comprehensive car insurance policy