What Does GAP Insurance Cover You For?

GAP Insurance covers the shortfall between your motor insurer’s total loss payout and a higher figure, either what you paid for the car, what you still owe on finance, or the cost of replacing it. If your car is written off or stolen, your insurer only pays the current market value, which is often less than you expect. GAP Insurance bridges that gap.

What it covers depends on the type of policy you choose. Here’s the breakdown.

What it covers · By policy type · What it doesn’t cover · Related links

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What it covers

The shortfall after a total loss, so the difference between your insurer’s settlement and the figure your policy protects.
Write-offs following an accident, fire, flood or theft, in line with your motor insurer accepting the claim and paying out the current maket value in settlement.
Outstanding finance, so you’re not left paying for a car you no longer have.
In some policies, a contribution towards your motor insurance excess (check the individual policy limit).

By policy type

Return to Invoice GAP pays back to the price you originally paid for the car.
Vehicle Replacement GAP covers the cost of replacing the car with the same make and model at current prices, which can be higher than the original invoice.
Agreed Value GAP tops the settlement back up to the car’s market value at the time you took out the policy, useful for privately bought used cars.
Lease & Contract Hire GAP clears what you owe the leasing company after a write-off.

What it doesn’t cover

Anything where your motor insurer hasn’t declared the car a total loss and paid out the market value in settlement.
Negative equity carried over from a previous finance agreement (check the policy terms).
Missed finance payments, arrears or late fees.
Wear and tear, servicing costs, or mechanical breakdown, which are different products entirely.

Tip: Always check the policy’s maximum claim limit and any excess contribution before you buy. Two policies that look similar can pay out very differently.