GAP Insurance: FAQs

Q. What is the difference between GAP insurance and car insurance?

A. Standard insurance and GAP insurance work together to make sure you get the desired payout if your car is deemed a total loss. You can’t claim on a GAP insurance policy without first making a claim on your car insurance.

The purpose of a standard car insurance policy is to cover the cost of repairs, handle liability claims, and partially reimburse the value of your vehicle if your car is damaged or stolen. On the other hand, GAP insurance exists to pay out the difference between what your insurance provider reimburses, and what your car is worth. This includes cars which you lease or have on finance.

Q. Can you get GAP insurance at any time?

A. It depends on which type of cover you’re after. For a brand new or financed car, you usually need to take out GAP insurance within a year of purchasing the vehicle. This timeframe applies to most types of GAP insurance, perhaps with the exclusion of RTV or Lease. Bear in mind that there might be providers who require you to purchase within a smaller amount of time, like three or six months after purchase.

Q. Are GAP insurance policies just for new or financed cars?

A. GAP insurance is designed to protect you from depreciation and to cover the gap between your car’s market value and what you originally paid for it. Because new cars depreciate much faster than older cars, GAP cover can be more beneficial for those who have bought a brand-new car or begun a finance agreement.

However, GAP insurance can also be beneficial for used cars. The benefits might be less significant for older vehicles, it can still provide valuable cover depending on the car's age and value.

Q. What is excluded from GAP insurance?

When it comes to GAP insurance, exclusions apply, just like any other insurance policy.

  • You need to have comprehensive car insurance. If you’ve only got a third-party insurance, you won’t be covered if your own vehicle is stolen or damaged.
  • As expected, you wouldn’t be covered for any claims which occur as a result of you breaking the law. Things like drink-driving or not having a valid licence.
  • If a non-named driver is behind the wheel when the total loss claim happens, you’re unlikely to be covered.
  • Vehicles used for business, hire-and-reward, or rallies/racing competitions also won’t be covered.
  • Any changes you’ve made to your car which are classed as non-standard modifications would be excluded from the pay out you might receive through GAP insurance.
  • High-value, well-travelled, and older cars are also likely to have an impact on whether you can receive GAP insurance cover. If your car is really expensive, the depreciation will be higher and insurers might not be able to cover the difference in a pay out. If your car is old or has high mileage, the pay out might not be large enough for your needs.
  • To make a claim, your vehicle needs to be irreparable or stolen - this judgement is down to your standard insurance provider.

This is not an exhaustive selection of exclusions - it’s up to you to read the small print and make sure you’re clued up on what’s covered and what’s not.

Q. Is GAP insurance really necessary?

GAP insurance isn't always necessary, but it’s up to you to decide. Here are some situations where it might not be worth it:

Your car is brand-new
If your car is less than a year old, most comprehensive insurance policies offer 'new for old' cover. This means your insurer will replace your car with a new, like-for-like model if it's written off or stolen. Check your policy's terms and conditions to be sure.

Your car does the job
If you're okay with a like-for-like replacement and don’t need a brand-new vehicle, your comprehensive insurance policy should suffice. It will pay out the current market value of your car, allowing you to replace it with something similar.

Your car was cheap
For second-hand cars that depreciate slowly, the difference between the current value and the purchase price is usually small. In this case, GAP insurance may not be worth it, as the potential benefit is minimal.

Other gap insurance articles which you may be interested in...

Types of GAP Insurance Types of GAP Insurance - Find out more the different types of GAP insurance here, including RTI and Vehicle Replacement.