What is GAP insurance?

GAP insurance protects you if you write off your car and your car insurance policy doesn’t pay enough to settle any outstanding loans on it or the cost of replacing it.

You can buy GAP insurance from a number of providers online, including such as Ala.co.uk, Click4Gap.co.uk and Confused.com

GAP stands for Guaranteed Asset Protection.

There are different types of GAP insurance cover available.

They basically cover the difference in the amount your car insurance company pays out if the car is a total write-off compared with what you still owe on any loans or finance or the amount you have to pay to replace the car.

GAP insurance is becoming increasingly popular due to the high depreciation costs on cars and their falling resale prices.

Types of GAP Insurance Policies

Return to Invoice GAP insurance

– RTI Gap insurance

You can buy RTI GAP insurance for cars aged from new to 7 years old. However it can only be bought within 3 months of buying the car.

It pays the difference between your car insurance claim settlement amount and the amount you paid for the car, the invoice amount for the car.

Example of Return to Invoice Gap insurance

  • Invoice amount, amount paid for the car – £18,000
  • Car insurance settlement amount – £13,200
  • Shortfall paid by the GAP insurance – £4,800

Return to Value GAP insurance

– RTV Gap

You can buy RTV Gap insurance for cars aged between 3 months and 7 years only.

It pays the difference between your car insurance claim settlement amount and the value of your car at the time you took out the policy.

Example of Return to Value Gap insurance

  • Value of car at time insurance bought – £16,000
  • Car insurance settlement amount – £11,800
  • Shortfall paid by the GAP insurance – £4,200

Finance GAP insurance

You can buy Finance GAP insurance for cars bought on finance, using loans, or a finance agreement such as hire purchase or lease purchase.

It pays the difference between your car insurance claim settlement amount and the amount outstanding on your loan or finance agreement.

This means the payout could be more than that from RTI GAP insurance. For extra comfort you can get combined RTI and Finance GAP cover from which you get then would get the highest amount applicable.

Example of Finance GAP insurance

  • Car purchase price – £19,000
  • Car deposit – £2,000
  • Car finance – £17,000
  • Car insurance settlement amount – £12,500
  • Amount of finance outstanding – £15,000
  • Shortfall paid by the GAP insurance – £2,500

Replacement GAP insurance

You can buy replacement GAP insurance to cover the cost of replacing your car with exactly the same make/model or equivalent as you originally bought.

This can only be bought for new or Ex Demo cars that are less than 3 months old and has to be purchased within 90 days of buying the car.

Example of Replacement Gap insurance

  • Cost of car – £17,500
  • Car insurance settlement amount – £11,800
  • Cost of replacement car – £18,800
  • Additional cost paid by the GAP insurance (directly to car dealer) – £7,000

Lease Gap insurance

If you leased your car rather than buying it outright, you can buy lease Gap insurance to help you pay the rest of your contract, including any applicable fees for cancelling your lending agreement early.


  1. Good article and a fair assessment of Gap Insurance. However, since it was written Vehicle Replacement insurance has become more popular, and changed in its terms. You can now get VRI Gap Insurance fot vehiles up to 8 years old, and whilst the majority of claims are paid to the dealer, you can find policies that pay you the funds, not the dealer. This gives you the choice on how you spend the funds, and the choice of car you get.

  2. I just can’t understand anyone in the day and age that declines taking out Gap Cover after they have purchased a Vehicle ,i believe everyone should have this marvellous product , the facts speak for them selves , with more and more cars on the road and more and more accidents due to careless driving more and more people are left with a short fall , there is 1-10 people out ther driving without a driving licence ,mot , insurance and many other reasons ,don’t get fooled by there insurance companies when they say you are covered Full Comprehensive , what they mean is Full Comp less depriciation , Gap is essential every time you are purchasing a new or used Vehicle .

  3. Ok I bought gap insurance for my car 11 months ago i paid nearlly £6000 for my car it was written off by a speeding youth who was charged with dangerous driving .Can I claim Gap insurance on top of my comp insurance?

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