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 to help 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, to 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 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 insurance
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.
Lease Gap insurance
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.