GAP Insurance Explained: Is It Worth Buying?

Summary

• GAP stands for Guaranteed Asset Protection: It covers the gap between what your insurer pays out and what you paid (or owe) for the car.
• It's most useful for new cars and finance deals: Cars lose value fast. If yours is written off, standard insurance may not cover what you owe.
• Don't buy from the dealer: Dealer GAP insurance costs 3–5x more than buying directly from a specialist. See our insurance types guide.

You buy a new car for £25,000. Two years later it's worth £17,000. If it gets written off, your insurer pays you £17,000. But you still owe £21,000 on finance.

That's a £4,000 gap. GAP insurance covers it.

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How GAP Insurance Works

GAP insurance pays out on top of your regular car insurance. There are three main types:

Return to Invoice (RTI)

Pays the difference between the insurer's payout and the original purchase price. Best for cash purchases.

Finance GAP

Pays the difference between the insurer's payout and the remaining finance balance. Best for PCP and HP deals.

Return to Value (RTV)

Pays the difference between the insurer's payout and the car's original market value (not the price you paid). Usually the cheapest option.

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When GAP Insurance Is Worth It

• New cars: They lose 15–35% of their value in the first year. A write-off could cost you thousands.
• Cars on PCP or HP finance: You may owe more than the car is worth for the first 2–3 years.
• Expensive cars: The bigger the price, the bigger the potential gap.
• High-deposit purchases: If you put down a big deposit and the car is written off, standard insurance won't refund your deposit.

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When You Don't Need GAP Insurance

• Used cars under £5,000: The gap between value and payout is usually small.
• Cars you own outright: If you don't owe anything, the risk is lower.
• Short-term ownership: If you're planning to sell within a year, the gap won't have time to grow much.

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What Does GAP Insurance Cost?

Where You Buy	Typical Cost (3-year policy)
Dealer (at point of sale)	£300–£600
Specialist GAP provider online	£60–£200

That's right — dealers charge up to 5x more for the same product. Always buy online from a specialist.

Dealers must now give you a 14-day cooling-off period on any insurance sold at point of sale. Use it. Shop around and cancel if you find cheaper.

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How to Claim on GAP Insurance

1. Your car is written off or stolen.
2. Your standard car insurer makes a payout based on the car's market value.
3. You accept the standard payout.
4. You contact your GAP insurer with the settlement figure and proof of the original purchase price or finance agreement.
5. The GAP insurer pays the difference.

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The Key Takeaway

GAP insurance is worth buying if you've bought a new or nearly-new car on finance. But always buy it from a specialist — never from the dealer.

For more on car insurance options, check our UK car insurance types guide.

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