Does GAP Insurance Cover Balloon Payments on PCP?

Yes, most GAP Insurance policies can cover the balloon payment (also known as the Guaranteed Future Value) as part of your finance settlement on a PCP, following a write-off or theft.

How balloon payments work · When GAP covers balloons · What to check · Related links

On a PCP and unsure if the balloon is covered?

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How balloon payments work

A balloon (optional final payment) is built into all PCP finance agreements.
It reduces monthly payments but leaves a lump sum at the end if you keep the car.
If the car is written off, the finance settlement still includes this balloon.

When GAP covers balloons

Finance GAP: Clears the finance balance, including the balloon, subject to claim limits. (Not available at Total Loss GAP)
Return to Invoice GAP: Pays the difference between the motor insurance payout and the original invoice. This means you can pay off the finance settlement, including the balloon payment, with any remainder, which becomes your deposit for a new car.
Vehicle Replacement GAP: Can cover from the motor insurance payout to the higher of the current replacement cost (at the time of your claim), the original invoice price you paid or the outstanding finance settlement (including the balloon payment).

What to check

Confirm whether your GAP policy explicitly includes balloon payments.
Check the claim limit to ensure it is high enough to cover your balloon.
Make sure that the finance agreement you have is a Personal Contract Plan and not a Personal Contract Hire (very different, no balloon and a different type of GAP Insurance required).

Tip: If you have a large balloon on your PCP, choose a policy with a higher claim limit to avoid a shortfall. At Total Loss GAP, we can cover a minimum claim limit of £50,000 with one insurer and up to £75,000 with another. This should be more than enough to cover any financial shortfall, including a balloon payment.