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GAP Insurance Explained. What Is It And Do You Need it?

From the moment they leave the dealership forecourt, the value of cars and other vehicles naturally depreciates over time.

When you have an accident, your insurer will usually pay out what the vehicle is worth at the time of the accident, and in keeping with vehicle depreciation the value of your payout will decrease as time goes on.

GAP insurance can help to recoup the difference between what you paid for the car and what it is worth at the time of an accident, should the vehicle be a write-off.

Taking out some cover alongside your usual car insurance policy can help add an extra level of protection to the purchase of a new car, ensuring that should you happen to write-off the car during the first couple of years of ownership.

What Does GAP Insurance Cover?

There are several types of GAP cover available, each of which will affect how much you get back in the event of an accident:

Return To Value Cover

Return To Value cover can be taken out at any time, and means that your GAP insurer will pay the shortfall between what the car was worth at the time that you took out a GAP policy and the amount you paid for the vehicle when it was brand new.

Example: Say you buy a brand new car for £12,000, you drive it for two years and then have an accident, your vehicle is deemed by your insurer to be worth just £8,000 at the time of the accident.

A GAP insurance policy would allow you to recover the £4,000 difference, which you would be out of pocket as a result of the accident.

Return To Invoice Cover

Alternatively you might choose to take out a policy when you first buy the car. This is known as Return to Invoice GAP Insurance. Essentially this covers your newly-purchased vehicle for a period of up to a year (or in the case of some brokers only 90 days).

Should you have an accident within that period, your GAP insurer would make up the difference between what your vehicle is worth at the time according to your comprehensive car insurance policy and what you paid for it.

Example: You’ve bought a new car for £18,000 and taken out both a comprehensive car insurance policy and GAP cover.

If you have an accident within the period of the GAP cover, your insurer would pay out their value – which in this case would be £17,000 – and your GAP cover would recoup the remaining £1,000 to bring it up to the original £18,000 value.

Vehicle Replacement GAP Insurance

If after an accident you want your vehicle replacing like-for-like, then Vehicle Replacement GAP Insurance can help you to recover the additional costs involved in replacing your vehicle on a like-by-like basis in the event your vehicle being a write off, even if the price of the vehicle has increased.

This can be particularly handy if your vehicle is a model that has been discontinued, allowing for a similar vehicle to be found in replacement.

What If I Bought The Car On A Finance Plan?

If you’ve bought your vehicle using a finance plan, then Finance GAP Insurance could be for you.

This policy pays out the difference between your payout from your insurance company and the amount that you still owe to your insurance company.

Short Term Cover

Be aware that GAP insurance policies are meant for the short-term in order to initially protect your new purchase when it’s closest to its’ initial value.

In keeping with vehicle depreciation, GAP insurance policies will usually last up to a maximum of four years, after which you’ll need to continue with your usual car insurance policy.

Speak with your broker about the length of time they allow you to hold GAP insurance.

Here at we can help you find a better deal on your GAP insurance policy. Enter a few details about yourself and your vehicle and we’ll search our network of UK-based brokers to find you the best deal on your GAP insurance policy.