GAP, or Guaranteed Asset Protection, insurance covers the shortfall between what your motor insurer pays if your car is written off or stolen, its current market value, and either the price you originally paid or the amount you still owe on finance. Because a car can lose value faster than the finance is repaid, that gap can be substantial. In 2024 the FCA required insurers to pause GAP sales over concerns it offered poor value, and sales resumed only after firms improved the deal for customers.
The point of GAP is that a standard comprehensive policy pays only the car’s value at the time of loss, which can be far less than you paid or still owe. GAP bridges that difference, but it is a product to buy with your eyes open on price and value.
How does GAP insurance work?
If your car is written off or stolen, your motor insurer pays out its market value at that moment. GAP insurance then pays the difference between that settlement and either the original purchase price or the outstanding finance balance, depending on the type of GAP cover. It sits on top of a comprehensive motor policy, which must be in place for GAP to respond.
When is GAP insurance worth having?
It is most relevant when the gap is likely to be large: a car bought new or nearly new, which depreciates fastest in the early years, or one bought on finance where the balance owed can exceed the car’s value for a while. For an older car bought outright, where market value and what you paid are close, the benefit is smaller.
What did the FCA do about GAP insurance?
The FCA found that GAP offered poor value: only a very small share of the premiums customers paid was being returned in claims, while a large share went on commission. In February 2024 insurers agreed to pause GAP sales at the FCA’s request, and sales recommenced later that year only after firms made changes, including materially lower commission, to give customers fairer value.
What should I check before buying GAP?
Compare the price of buying it from a car dealer against a standalone provider, since the two can differ greatly, check exactly which type of gap the policy covers, and make sure it reflects how you bought the car. Given the FCA’s findings, it is a product where shopping around on price and value genuinely pays. It also relies on a comprehensive policy being in place, and interacts with how your insurer sets a write-off value.
Getting the cover right
Whether GAP is worth it depends on how you bought the car and how fast it will lose value, and it should be weighed against its cost. A broker can help you judge whether it fits, alongside your main motor cover. To review your motor cover, get a quote or speak to the team.