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.

In simple terms, 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.

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):

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, each designed for different situations. The main ones are:

Return to Invoice (RTI) GAP - Covers the shortfall between your insurer’s payout and the original invoice price you paid.

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.

Lease & Contract Hire GAP - Pays off any outstanding lease balance if your insurer’s settlement doesn’t cover it.

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).

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.

Next Steps

Get a GAP Insurance Quote in Minutes

See our GAP Insurance Guides hub page.

Read: How to Make a GAP Insurance Claim