Gap insurance Gap insurance: The basics
This page outlines what Gap insurance is and how it works. Already understand Gap insurance and are ready to make a purchase? See buying Gap insurance. Want to know how to make a Gap insurance claim? See claiming on your Gap insurance.
What is Gap insurance?
Having your car stolen or written-off can be worrying enough without having to grapple with your insurer over your claim.
Worse still, with insurers usually paying out the current market value of your vehicle - not the price you paid for it - you can find yourself out of pocket, especially if your car was brand new.
Guaranteed Asset Protection, more commonly called Gap insurance, is designed to work alongside comprehensive car insurance helping you cover the shortfall.
There are many different types of Gap insurance, ranging from products that help you get back what you paid for your car and those that help you pay off any outstanding loans on the vehicle.
What are the different types of Gap insurance?
The Gap insurance market can be complex, with different providers offering their own unique products. Some of the most common policies are listed below.
Finance Gap insurance
One of the most basic products on the market, finance Gap insurance helps you pay off any outstanding loans on your car if it's written-off.
Return to invoice Gap insurance
Return to invoice Gap insurance tops up the claims payout from your car insurer to the amount you bought the vehicle for. Many providers offer finance Gap insurance as part of this product, to also cover the cost of borrowing.
Find out more: Return to invoice Gap review
Vehicle replacement Gap insurance
Rather than helping you reach the amount you paid for the car, vehicle replacement Gap insurance bridges the distance between your car insurance payout and the cost of a replacing your vehicle with a new one. Many providers offer finance Gap insurance as part of this product, to also cover the cost of borrowing.
Find out more: Vehicle replacement Gap review
Return to value Gap
Return to value Gap is similar to return to invoice Gap insurance, but instead of helping you get exactly what you paid for the car it pays the difference between your car insurance settlement and the value of the vehicle when it was first purchased. This could prove useful if you bought the car second hand, or you have had the vehicle for a long time.
If you leased your car rather than buying it outright, lease Gap insurance helps you pay the rest of your contract and any fees that may apply for cancelling your lending agreement early.
Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.