November 5, 2020

Everything You Need To Know About GAP Insurance


When you purchase a car, it is important to know that it will very likely depreciate in value. Often much faster than you would expect. In fact, a survey taken by ‘Insurance Business UK’ found that this can be as much as ‘60% within the first three years of purchase’.

Whilst most of us accept this, a study done in December 2018 found that 34% of those surveyed expected their motor insurance policy to replace the vehicle or pay out a settlement equivalent to what they had originally paid for their car.

On top of this, 78% of people who used a finance option to purchase their car, believed that if their car were written off that their motor insurance policy would pay for any outstanding balance they had.

Shockingly to these people, this is all too often not the case.

For the majority of people, if your car is written off your insurer will most likely only reimburse you the amount that the car was worth at the time it was written off. Not the amount you paid for the car!

With this in mind, it is surprising that so few people have heard of GAP insurance, and that even less believe it is worth the money. In this article, we explain GAP insurance in full and why we think it can be a good idea.

To ensure you have access to all the information, we’ll be answering some of the most common questions:

  • What is GAP Insurance?
  • What defines a vehicle as a write-off?
  • What does it mean when my vehicle is unrecoverable?
  • What are the different types of GAP insurance?
  • What are the requirements for a GAP insurance policy?
  • When GAP cover is and is not worth the investment?

What is GAP insurance?

GAP stands for Guaranteed Asset Protection.

It is an insurance product that covers the difference (or gap) between the price you paid for your car, and how much your insurance company thinks your car is worth, at the time it was written off or deemed to be unrecoverable.

What defines a vehicle as a write-off?

In insurance, there are three ways a vehicle can class as “written off”.

  • The vehicle is now only fit for scrap and should never be driven again.
  • The vehicle is unfit for the road, should never be driven again, but some parts of it can be salvaged.
  • A financial write-off, the vehicle could be repaired, but the costs of repairing the vehicle are too high and it exceeds the initial price of the vehicle.

What does it mean when my vehicle is Unrecoverable?

A vehicle is said to be unrecoverable when you have suffered a total loss. A total loss is where you have made a claim under your main motor insurance policy as a result of accidental damage, fire, or theft. Your car is then said to be beyond economic repair and it results in a settlement between you and your insurer.

Are there different types of GAP insurance?

Broadly there are three ‘core’ types of GAP insurance.

Finance Gap Insurance: This repays the outstanding balance that you have on your financial plan after the pay-out from your motor insurance. This means you will be left debt free after your car is written off.

Return to Invoice GAP Insurance: This covers the cash difference between the price you paid for your car and the payment you received from your primary motor insurer.

Vehicle replacement GAP Insurance: This covers the distance between the pay-out and the costs of replacing your vehicle with an equivalent one of the same model and specification. The premiums for this are usually much higher


At Bettersafe we provide two types of GAP Insurance:

Combined GAP Insurance: This is a return to invoice GAP insurance (sometimes referred to as RTI GAP insurance) and pays the difference between the motor insurers settlement and the purchase price of the vehicle.

Lease GAP Insurance: This is a finance GAP insurance. This product will pay off the difference between the motor insurance settlement and the outstanding balance on your finance agreement. This will also cover your initial deposit paid on your vehicle up to a maximum value of £2000.

What are the requirements for a GAP insurance policy?

To be covered by a Bettersafe GAP policy, the following need to apply to you:

  • Your vehicle must be covered under a comprehensive motor insurance policy by an authorised United Kingdom motor insurer. This policy must also cover loss or damage to your vehicle caused by accidental damage, fire or if the car is stolen.
  • The car must be equal to or below £80,000 in value.
  • You must have purchased your car within 60 days prior to the start of your policy date.

REMEMBER, always make sure you read the policy wording before buying any insurance policy. You need to make sure that you are eligible for cover.


Is GAP insurance really worth the investment?

As with any insurance choice, it entirely depends on your own personal circumstances. Each year around 384,000 cars are written off and many people end up losing out. We have listed out a few scenarios where we believe a GAP policy would be beneficial to you.

If you have bought a brand-new car and it's likely to depreciate. The value of a car can depreciate significantly over three years. Martin Lewis’s Money Saving Expert found that after three years a Citroen C- Zero (2011) retained less than 20% of its value. That is, when bought for new at £26,000, after three years it was worth just under £5,000.

In this instance, if your car were written off, you would only be paid £5,000 from your motor insurance. This would leave you £21,000 out of pocket!

If you put a small deposit down on your finance deal. In this situation, you will likely have a large amount of money to pay off if your car is written off. A lease GAP policy would likely be a good investment in this instance. If your vehicle were classed as a write-off, the policy would cover what you still owe, meaning you would be able to afford a new car to keep you on the go.


You want your car replaced for the amount you paid. If you paid to say £30,000 for a brand-new car and 15 months later it was written off at a value of £17,000, that can be incredibly frustrating. If you are not happy with the lower amount (even though it would be enough to buy a like-for-like car) then a GAP insurance policy would be worth it.

When would a GAP policy not be worthwhile?

If you purchase a car that is going to appreciate in value. Whilst this is not common, when purchasing classic or rare cars it is possible for a car's value to go up. In this case, we would say it is not worth buying a GAP policy as it would not benefit you if your car was written off.

Your car is less than one year old, and you have fully comprehensive car insurance. Most fully comprehensive policies offer a new car replacement during the first 12 months for new cars. If this is the case purchasing a policy may not be necessary.
If you are not bothered by the depreciation of your car and would be happy with a replacement. Your motor insurance policy will payout for a replacement for the car at the value of the car at the time it was written off. If you are not bothered by having your written off vehicle with a brand-new car then GAP probably is not for you.

For any enquiries about our GAP policies or any further information, do not hesitate to get in contact with us at