What is GAP insurance?
Guaranteed Asset Protection (GAP) is an insurance type which provides financial cover for the depreciation in a vehicle’s value and is usually purchased alongside new vehicles.
In the event of a ‘total loss’ claim or ‘write off’, an insurer will usually agree to pay out the market value of the vehicle at that time. This often leaves motorists at a disadvantage, given that new cars can drop in value quite quickly. GAP insurance therefore covers the difference between the pay-out received from the insurance company and the amount that would be required to purchase an equivalent vehicle.
GAP insurance won’t directly replace a vehicle or pay out a vehicle’s value in full, as it is intended to be used alongside regular car insurance.
There are multiple types of GAP insurance, and insurers will likely apply their own policy terms and exclusions when providing the cover. As a result, we would always advise using a local and reputable insurance broker to purchase the insurance policy, to ensure it meets your individual circumstances.
