Gap insurance

Compare GAP insurance quotes for your car, van, motorbike and motorhome

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What is GAP insurance?

Guaranteed Asset Protection (GAP) insurance protects you against financial loss if your vehicle is declared a total loss or write-off by your car insurance provider.

If you have a motor accident and your vehicle’s written off, or if your car’s stolen, your insurance will provide a financial settlement for the loss of your vehicle.

Unfortunately, your motor insurance usually only pays out the current market value, which is likely to be less than the price you paid.

GAP insurance is a standalone policy that’s designed to cover the difference between the price you paid for the vehicle and its current market value.

So, if you bought a car on finance for £20,000 and it depreciated by 60% in three years, the car would be worth £8,000. If the car was written off, your insurer would pay the market value of £8,000 (minus any excess), so you’re £12,000 out of pocket. GAP insurance would cover that £12,000 so you can then purchase a brand-new car.


How does GAP insurance work?

  1. Contact your vehicle insurer

    If you have an accident that makes your vehicle unusable, first get in touch with your insurer and get the vehicle declared a total loss

  2. Contact your GAP insurer

    Before you accept any settlement your insurer has offered, contact your GAP insurer. Negotiations are then between both insurers so you don't need to be the go-between

  3. Accept the offer

    If you’re happy with the offer, sign and return the forms sent by the insurer and be prepared to provide supporting documents, like your insurance certificate and insurance settlement figure

  4. Challenge the offer

    You should first complain to the insurers if you’re not happy. If the issue isn’t resolved to your satisfaction, you can get in touch with the Financial Ombudsman who will investigate

Benefits of GAP insurance

GAP insurance provides additional financial peace of mind if your vehicle's written off, but it doesn't suit everyone.

Reasons to buy GAP insurance

It may be right for you if:

  • You took out finance to buy your vehicle
  • You’ve bought a motor that depreciates quickly, especially a new one
  • Your vehicle is leased or on a contract hire deal

Reasons not to buy GAP insurance

But you might not need it if:

  • Your motor is less than a year old and your insurance includes new vehicle replacement cover
  • You’d be satisfied with a like-for-like replacement for your vehicle at its current market value
  • You have a used vehicle that depreciates more slowly

Is GAP insurance worth it?

You don’t have to buy GAP insurance. But it can provide peace of mind if you know that you’d want to buy a brand-new replacement if your car was written off.

It can also be useful if you bought your car on finance.

In these circumstances, if your car got written off or stolen, although motor insurance would pay out what your car’s worth at the time of the incident, you could still be left with outstanding payments on a car you no longer have. With GAP insurance in place, the loan would be paid off.

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What does a GAP insurance policy cover?

What’s covered?

  • Claims where your insurer declares your vehicle a total loss due to accident, theft, fire or water damage
  • GAP insurance is usually taken out on brand-new cars, but it can also cover used vehicles.

What’s not covered?

There are some exclusions. For example:

  • GAP insurance won’t cover you unless you have fully comprehensive car insurance
  • You’re not covered if someone else is driving your car without a valid licence or if it’s written off due to drink or drug-driving
  • If someone who isn’t a named driver on your car insurance was driving at the time of the accident
  • Vehicles over a certain value, age (often over 10 years old) or mileage (often more than 100,000 miles) depending on the policy you choose
  • Modifications you’ve made to the car since you bought it - like alloys or spoilers - that may have added value. GAP insurance will only cover the original value of your vehicle
  • Claims where damage is repairable - GAP insurance only covers vehicles declared a write-off or total loss

How much is GAP insurance?

The cost of GAP insurance will depend on a few different factors:

  • The value of your vehicle - make, model and age. Expensive vehicles will result in higher premiums
  • The length of your finance agreement and policy - the longer you need the policy in place, the more it’ll cost you
  • The type of policy you opt for

Protect your car, van, motorbike or motorhome with GAP insurance from i-Wonder[1]

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How can I get cheaper GAP insurance quotes?

  1. Choose the type of cover carefully

    There are a few different types of GAP insurance and some cost more than others. Choose which one you need carefully

  2. Compare quotes

    The dealership where you purchase your car might offer you a GAP insurance policy, but it may not be the most cost-effective option. It’s a good idea to shop around.

  3. Go for a higher excess

    This can bring policy costs down. But be sure you could afford to pay it in the event of a claim

Types of GAP insurance available

There are five main types of GAP insurance. They all make up the shortfall for depreciation on your vehicle but work in slightly different ways.

Return to invoice cover (RTI)

If your vehicle is written off or a total loss, an RTI policy will pay the difference between the original purchase price and the payout received from your insurer. It might even cover any outstanding finance.

RTI is for vehicles bought from a dealer within the last six months.

Agreed Value Cover (AVC)

Most insurers offer AVC for vehicles bought privately, or from a dealer after the RTI cut off point.

It covers the difference between the insurance valuation at the time it was written off and the value of the car, van, motorbike or motorhome when you started the policy.

Contract Hire GAP (CHG)

This type of cover is for lease vehicles. Most insurers will cover outstanding rental payments or the termination fee, as well as any shortfall in the market value payout your insurer gives you.

Finance GAP

This is for cars, vans, motorbikes or motorhomes bought on finance or a lease contract and will help clear any outstanding debt owed on the vehicle.

This type of cover is often part of a package. For instance, it can be combined with an RTI policy.

Negative Equity

Similar to finance GAP insurance, but this policy is for if the loan amount is more than the cost of the motor. For example, if you’ve part-exchanged a vehicle before the finance was paid off, and the remaining amount has been moved across to your new deal.

Vehicle replacement (VR)

In the event of a total loss, VR provides a payout equal to the difference between the cost to replace the vehicle with a new motor of the same specification and the market value payout from your insurance provider.

This type of cover is designed to protect you should the cost of a replacement vehicle increase. You can’t purchase this type of policy through Go.Compare currently.

Add-ons and optional extras

These add-ons to a GAP insurance policy often come with no excess to pay if you make a claim:

Scratch and dent insurance

Covers cosmetic damage to your car’s bodywork - things like chips from stones or small scratches on the paintwork

Tyres and alloy wheels

Pays for parts, labour, repairs or replacement of alloys or tyres that have suffered accidental or malicious damage, like punctures and tears, pothole damage or scrapes and dents from kerbs

Frequently asked questions

GAP insurance is designed to cover depreciation. So it’s usually associated with new cars, vans, motorbikes or motorhomes because they depreciate much faster than used vehicles.

You can still get GAP insurance for used motors, but the benefits are potentially smaller so it might not be worthwhile for the cost.

No, it’s not exclusively for vehicles bought on finance. You can also get GAP insurance if you bought your motor outright. It protects you from depreciation, covering the gap between your car’s market value and what you bought it for, enabling you to buy a brand-new replacement vehicle without having to spend extra.

It’s not compulsory but it can offer peace of mind. A CHG policy can pay the difference between the settlement figure from your main insurer and any outstanding finance on the lease.

You can usually take out a GAP insurance policy for between one and five years to match the length of your finance term.

It can usually only be taken out within a year after you’ve bought your car. Although some providers allow you to defer or buy it in the second year of ownership.

This is because some people prefer to rely on new vehicle replacement cover that’s included in their main motor insurance initially. It replaces a car that’s less than a year old that’s written off or stolen with a new like-for-like make and model.

You can only claim on GAP insurance if your car’s been declared a total loss by your motor insurer.

Most GAP insurers ask that you contact them before accepting your vehicle insurer’s settlement so that they can investigate and negotiate a higher settlement if necessary. There’s a set period during which you must contact them – it will be detailed in your policy documents.

You’ll need to provide your GAP insurer with the:

  • Vehicle invoice and receipt
  • Finance agreement, if you have one - plus the settlement statement of your finance agreement
  • Settlement statement from your motor insurance company
  • Police reports, if applicable

It’s designed to pay the difference between the total loss settlement paid by your motor insurer and the value of a new car. Or to pay off the amount you still owe on finance.

So, combined with the payment from your main car insurer, you should have enough to cover what you paid for your car in the first place. Or be left with no outstanding finance to pay, depending on the type of GAP policy you purchase.

GAP insurance typically covers all named drivers on the comprehensive motor insurance policy for the vehicle.

Once you’ve claimed on the policy, it’s terminated. If you replace your vehicle with another and want that covered, you’d need to buy a new GAP policy.

If you pay off your car loan early, you could qualify for a pro-rata refund of unused GAP premiums, if you paid for the total cost of your insurance upfront. There may be a cancellation fee to pay.

Page last reviewed: 11 August 2023
Page reviewed by: Holly Thomas

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