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GAP (Guaranteed Asset Protection) insurance can be a useful addition, but its value to you depends on a couple of factors.

If your car has been declared a write-off or ‘total loss’ or was stolen and not recovered, usually insurance companies will only pay out its current market value, not what you initially paid for it.

What is GAP Insurance?

GAP insurance is an additional form of insurance that is bought separately to your primary motor insurance policy.

It covers the difference between the amount of money an insurer pays out and the amount you either paid for your car or the amount you still owe on a finance agreement.

Types of GAP insurance

The three main types of GAP insurance are Return To Invoice, Return To Value and Vehicle Replacement Cover.

Return to Invoice cover pays the difference between your insurer’s total loss payment and the exact price you paid for your car.

Return to Value cover pays you the difference between the value of your car when it was new and the insurance company’s payment.

Vehicle replacement cover pays the difference between your cost for replacing a written-off car with a new one of the same make, model and specifications and an insurer’s total write-off payment to you.

Take this as a GAP insurance example.

Simon bought a brand new Mercedes-Benz C220d AMG Line Night Edition Premium for £31,000 in 2019.

Just over a year later, his car is declared a write-off after a collision.

Simon’s insurer does an assessment: the car is more than one year old and has lost 40% of its value in that time.

His insurer, therefore, offers Simon £18,600.

That means Simon has lost £12,400 from the value of his car and cannot buy a similar new vehicle for the amount of his insurance payout.

That’s where GAP insurance steps in.

Simon accepts £18,600 from the motor insurer.

If he has Return to Invoice cover, his GAP insurance will cover the £12,400 difference.

Thankfully for Simon, he can now go and buy a new car again if he wants.

What else does GAP insurance cover?

GAP insurance also covers the cost of any finance payments that are outstanding after your car was declared a total loss.

Do I need GAP insurance?

Generally, GAP insurance is sold for cars aged up to ten years old and is available for a period of up to three years.

If your car is older than ten years, then you, in most cases, cannot take out a GAP insurance policy.

And while it can, in theory, be taken out for a car up to ten years old, the real benefits of the policy are usually for brand new cars that depreciate quickly and vehicles up to three years old that are on finance.


If you’ve been in an accident that wasn’t your fault CRASH Services can take care of everything at no cost to you. Find out more about their services today. 


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