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What Are the Different Types of GAP Insurance?
GAP Insurance isn't one-size-fits-all. In fact, there are several different types of GAP cover, each designed to work best in specific situations, depending on how you bought your car, whether you're financing, leasing, or paid in full.
If you're unsure which type of GAP Insurance suits you, here's a simple breakdown of the main cover types and what they do.
Return to Invoice GAP (RTI)
Best for: New or nearly new cars bought with cash, HP, or PCP .png "How does Return to Invoice GAP work")
What it does: Tops up your insurer's payout to match what you originally paid for the car.
RTI GAP Insurance is one of the most common types of cover. If your vehicle is written off or stolen, and your motor insurer only pays the market value, this policy can pay the difference between that and your original invoice price.
It doesn't matter how much you owe on finance; RTI pays based on what you paid, not what you still owe.
Example:
- You bought your car for £25,000
- Insurer pays £19,000 after a total loss
- GAP Insurance pays £6,000 to bring you back to your purchase price
Finance GAP (also called Finance Shortfall GAP)
Best for: Vehicles purchased on hire purchase or PCP finance with a small deposit and/or interest on the amount financed.
What it does: Covers the shortfall between the insurance payout and your finance balance at the point of write-off.
This type of GAP doesn't return you to your original purchase price.
Instead, it pays just enough to settle your outstanding finance if your car is written off.
It's useful if you're mainly concerned about being left with debt. It does not provide you with any financial assistance to help replace the car.
Example:
- You buy a car for £18,000, put in £500 deposit and take £17,500 on finance
- A year later, the car is stolen and the motor insurer pays £14,000 as the market value settlement.
- You still owe £16,500 on your finance
- GAP pays £2,500 to settle the loan
Vehicle Replacement GAP
Best for: Brand new cars, especially ones likely to rise in replacement cost or become unavailable in the future
What it does: Covers the difference between your insurer's payout and the cost of an equivalent replacement vehicle at the time of the claim. .png "how VRI GAP Insurance works")
If you originally bought a brand-new car, the equivalent replacement will be based on the brand-new version at the time of your claim.
If you bought a 6-month-old, ex-demonstrator vehicle, then the equivalent replacement will be a used, 6-month-old example at the time of your claim.
Vehicle Replacement GAP takes into account inflation, spec changes, and discontinued models. If your car has gone up in price since you bought it, this policy aims to cover that.
It's typically more expensive than RTI, but it offers the highest potential payout.
Example:
- You paid £25,000 for a brand new car
- At the time of the claim, the same model now costs £28,000
- The motor insurer pays £19,000 in settlement for your old car
- GAP pays £9,000 to cover the full replacement cost (£19,000 + £9,000)
Contract Hire GAP (Lease GAP)
Best for: Vehicles on a lease or contract hire, where there's no option to own the car
What it does: Covers the difference between the motor insurer's settlement and the outstanding lease settlement at the point of loss.
Contract Hire GAP can help pay off outstanding rental payments and potential early termination costs.
Contract Hire GAP is specifically designed for leased vehicles. It doesn't pay you anything directly. It clears the financial liability left on your lease agreement if your vehicle is deemed a total loss.
Example:
- You have 18 months left on a lease
- The car is written off, and your motor insurer pays a market value settlement of £15,000.
- Your lease settlement is £18,000, including outstanding rentals and early termination fees
- Contract Hire GAP pays off the difference of £3,000 between the motor insurer's settlement and the lease settlement
Agreed Value GAP
Best for: Cars bought privately or outside the dealer network, especially if time has passed since the purchase
What it does: Covers the difference between your insurer's payout and the car's agreed value at the time the policy starts. The agreed value is usually based on the Glass' Guide Retail Value at the time you buy the policy.
An Agreed Value GAP policy works differently. It's based on a starting value agreed when you take out the cover, not what you paid for the car initially.
That makes it useful for drivers who bought a car second-hand, from a private seller, or outside the usual GAP Insurance eligibility window (such as more than 180 days after purchase).
Example:
- You bought a car for £20,000
- A year later, you take out an Agreed Value GAP with an agreed value of £15,000
- A further year later, your vehicle is written off and the insurer pays £11,000
- GAP pays £4,000 to bring you back to the agreed value
Which Type of GAP Insurance Do I Need?
Here's a simple way to decide:
- Bought your car brand new with cash or HP?
- → Return to Invoice GAP, Vehicle Replacement GAP
- On HP or PCP with a small deposit?
- → Return to Invoice, Finance GAP, Vehicle Replacement GAP
- On HP or PCP with a large deposit?
- → Return to Invoice, Vehicle Replacement GAP
- Worried about car prices increasing or replacements becoming unavailable?
- → Vehicle Replacement GAP
- Leased your car with no option to buy?
- → Contract Hire GAP
- Bought your car privately or too long ago for RTI to apply?
- → Agreed Value GAP
Final Thought
GAP Insurance isn't just one thing. The right type depends on how you bought your car, how you're financing it (if at all), and what kind of risk you want to cover.
Getting the wrong type won't always leave you unprotected, but getting the right type means you'll get the best result if the worst happens.
[See your options or get a quick GAP Insurance quote]
Written by Mark Griffiths, founding Director of Aequitas Automotive Ltd, the company behind Total Loss GAP. Published 19/7/25