What is GAP Insurance?

GAP Insurance, short for Guaranteed Asset Protection, covers the difference between your motor insurer’s payout and what you originally paid, still owe on finance, or need to replace your car if it’s written off or stolen.

GAP Insurance exists because vehicles depreciate. If your car is declared a total loss and your insurer only pays its market value, GAP Insurance fills a shortfall so you aren’t left out of pocket.

Reviewed by Mark Griffiths, Founding Director and GAP Insurance expert
Last reviewed: 29th December 2025 · View profile

How GAP Insurance Works

When a car is written off after theft, fire, flood, or an accident, your motor insurer will usually pay you its market value at the time of the claim.

The market value is the cost of replacing the vehicle with the same age, mileage and condition of the car at the time of your claim, not when you first bought or leased it.

That’s often much less than you originally paid, and it may not clear your finance agreement or give you enough to replace the vehicle with one of the same standard as when you bought it.

A GAP Insurance claim example (using Return to Invoice GAP): What is GAP Insurance?

You bought your car for £20,000.
Two years later, it’s stolen.
Your insurer pays the market value of £13,000.
With GAP Insurance, the £7,000 shortfall is covered.

The addition of a GAP Insurance policy to your comprehensive motor insurance ensures you get the original £20,000 purchase price back in full, even though two years have elapsed.

Types of GAP Insurance

There are several types of GAP cover, including Return to Invoice, Vehicle Replacement, and Contract Hire GAP. Each works differently and applies to specific purchase or finance scenarios. Choosing the wrong type may result in no payout when a claim is made.

Return to Invoice (RTI) GAP - Covers the shortfall between your insurer’s payout and the original invoice price you paid. This is the most common type of GAP Insurance offered widely in motor dealerships and online.

Vehicle Replacement (VRI) GAP - Covers the cost of replacing your car with the same make, model, and spec, even if prices have gone up since you bought it. Motor dealers rarely provide the most comprehensive type of GAP cover. VRI GAP products can also differ; check precisely what you are covered for, and do not assume all Vehicle Replacement GAP cover is the same.

Lease & Contract Hire GAP - Pays off any outstanding lease balance if your insurer’s settlement doesn’t cover it. Specialist cover for lease agreements where you have no option to own the vehicle, and it is a fixed-term rental. Lease & Contract hire GAP can cover any shortfall liability on the lease agreement, plus, if selected, the advanced rental payment paid at the start of the lease.

Which type is right for you? See our Types of GAP Insurance guide for a simple explanation.

When GAP Insurance is Most Useful

GAP Insurance is especially valuable if you:

Drive a new or nearly-new car (which depreciates quickly).
Bought on PCP, HP, or lease finance.
Own a specialist or high-value vehicle.
Purchased during a time of rising car prices (COVID, for example).
Want peace of mind that you won’t face a financial shortfall.

What GAP Insurance Doesn’t Cover (typical exclusions)

While GAP Insurance is here to protect you financially, it won’t apply if:

Your motor insurer repairs or replaces the vehicle instead of writing it off.
You only hold third-party cover - comprehensive insurance is required.
Keys were left inside the car when it was stolen.
You buy the policy outside the allowed time window (usually 90–180 days from vehicle purchase).

See: The Top 10 Reasons why GAP Insurance will not pay out

Should You Buy GAP Insurance?

Here are some things to think about:

New cars can lose 50–60% of their value in just three years.
If you’re financing the vehicle, a total loss could leave you with outstanding payments.
Even if you own the car outright, replacing it at today’s prices could cost much more than your insurer pays.

If you want certainty that you can replace or settle your car without financial stress, GAP Insurance can make sense.

Key things to remember about GAP Insurance

You must have fully comprehensive motor insurance in place. GAP Insurance adds to your motor insurance cover; it does not replace it.
GAP Insurance is not compulsory
You must buy GAP Insurance within a set time frame of buying your vehicle or getting it on a lease. Insurers have different limits on this. Some have a 90-day window to purchase, some up to 180 days. The maximum is 365 days if specific criteria are met. Check the terms you are being offered.
There are maximum age and mileage limits on the vehicles you can put on cover at the time you buy GAP cover. This can be up to 10 years old and up to 100,000 miles with current Total Loss GAP products, although some are limited to 8 years and 80,000 miles when you take out cover.
GAP Insurance premiums vary depending on the level of cover, vehicle value, and the term you choose; specialist providers often offer more competitive pricing than dealer-supplied policies. As an example, Return to Invoice GAP cover from Total Loss GAP can start from £77.89 for two-year cover on vehicles with a purchase price below £15,000, subject to eligibility and policy terms. Cover is available for longer periods and higher vehicle values, including up to four years and vehicles valued up to £150,000. As vehicle value and policy length increase, the potential settlement amount and associated risk increase, which is reflected in the policy premium.

Next Steps

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See our GAP Insurance Guides hub page. Learn more about GAP Insurance.

Read: How to Make a GAP Insurance Claim