Is Gap Insurance Right For You?
Considering Gap Insurance But Not Whether It’s Fits Your Needs? Here’s Everything You Need To Know.
Quick Links
- 1 Minute Read
- Introduction
- What Does Gap Insurance Do?
- How Often Are Cars Written Off?
- Is Gap Insurance Right For You?
- When Gap Insurance Can Be Useful
- When It Might Not Be Necessary
- Other Factors To Think About
- Our Final Word
1 Minute Read
GAP (Guaranteed Asset Protection) insurance covers the shortfall between what your car insurer pays if your vehicle is written off or stolen (its market value) and what you originally paid or still owe on finance. With cars losing up to 60% of their value in 3 years, that “gap” can be thousands of pounds.
It’s most useful for new cars, expensive models and cars that are financed or leased.
When buying, shop around; online providers are usually far cheaper than dealerships. Always check exclusions, eligibility, and policy details (not all cover is the same).
Bottom Line: GAP insurance isn’t for everyone, but if losing your car tomorrow would leave you with a big financial hole, it’s a smart safety net.
Introduction
Car ownership isn’t just about getting from A to B. It’s about protecting what’s likely one of the biggest purchases you’ll make outside of a home. For many drivers, Gap Insurance is something they’ve heard of but aren’t entirely sure they need. Is it really worth it, or is it just another optional extra that sounds good in theory but rarely makes sense in practice?
In this guide, we’re looking at whether Gap is right for you (spoiler alert: it probably is). First, though, as always, let’s cover some of the basics.
What Does Gap Insurance Do?
In simple terms, Gap Insurance covers the financial gap between what your car insurer pays out if your vehicle is written off or stolen and what you actually owe (or originally paid).
Why does this matter? The second you drive off the forecourt, your car begins to lose value.
New cars can lose up to 60% of their value in the first three years. If something happens during that time, a standard insurance policy usually only pays the current market value. That could leave you thousands short of what you owe on finance, or well below what you originally spent.
Gap Insurance is designed to fill that shortfall.
Free Tool: Try our free Car Depreciation Calculator to see how much value your car could lose.
How Often Are Cars Written Off?
According to the DVLA, 562,185 cars were written off in the UK in 2024, equating to one every minute. That’s a rise of 46% since 2017.
That means that over 550,000 people could have been financially liable if their insurer only offered a settlement figure that reflected the value of the car at the time, not how much they owed or paid.
Read More: If you’re involved in an accident, it can pay to be clued up on the different write-off categories. Read our guide: Different Car Write-Off Categories Explained.
A rise of 46% since 2017
Is Gap Insurance Right For You?
When Gap Insurance Can Be Useful
Gap Insurance isn’t for everyone, but there are scenarios where it can offer genuine peace of mind. For example:
- New cars: New cars mean quicker depreciation. If you’ve just bought a brand-new vehicle, its value drops quickly.
- Finance & Lease Cars: If your finance agreement is higher than your car’s market value, you could still owe money if it’s written off.
- Luxury & High Value Cars: ‘Prestige’ models tend to lose value faster, so the gap between payout and purchase price can be larger.
- High Mileage Drivers: More miles usually means quicker depreciation.
In these cases, Gap Insurance acts as a safety net.
When It Might Not Be Necessary
That said, not every driver benefits. Here are a few situations where Gap Insurance might not be as beneficial:
- Older Cars: Depreciation tends to be less steep after the first few years. So your financial shortfall may be lower.
- Cars Bought Outright: If you wouldn’t be financially stretched replacing it, you might not need the extra cover.
- Cheaper Cars: Some cars are affordable enough that the risk isn’t worth the added cost.
It’s not about whether Gap Insurance is "good" or "bad," but whether it fits your particular situation.
Of course, in the instances above, there are still some options if you’re looking for total peace of mind. Return To Invoice insurance will bring your settlement up to your invoice amount, if you bought it on finance, covering cars up to 8 years old.
Vehicle Replacement Cover is a good option for car owners who’d like to find a ‘like for like’ replacement of their vehicle if it’s ever written off, covering cars up to 10 years old; something which is pretty hard to do with an insurer’s usual settlement figure.
Other Factors To Think About
Gap Insurance isn’t one-size-fits-all, so it’s worth thinking about:
Policy Cost
These days, you can get a Gap Insurance quote in seconds online, so it pays to shop around and find a policy that fits your budget. Don’t be tempted to shop purely on price though. Take a look at your potential provider’s reviews and ratings, a signal of how you’ll be treated if you ever need to claim
What’s more, avoid buying through a dealership (unless it really makes sense). Whilst it provides the convenience of having ‘everything under one roof’ the prices are often much more expensive than buying online.
Read More: Here’ some other reasons Why You Shouldn’t Take Out Gap Insurance From Your Motor Dealer.
Exclusions
Not all polices cover everything, some are more suited to leasing or pcp finance, whilst others work better for ‘traditional’ hire-purchase.
Some will only cover new cars, whilst others will provide cover for older cars (typically up to 8-10 years old).
Aside from eligibility, remember to check any caveats that could impact your ability to claim or receive a payout; essentially, make sure you read your documents carefully and are 100% clear before purchasing. A good Gap Insurance provider should always be transparent and will be happy to help with any questions you have.
How Long You Keep The Car
If you plan to change the vehicle every couple of years, you’ll need a policy that works for you.
Our Final Word
For many, the attraction of Gap Insurance is less about numbers and more about security.
Knowing that you won’t be left with debt after losing your car unexpectedly can make it worth the expense.
So, is Gap Insurance right for you? If the thought of covering a large shortfall makes you nervous, it might be worth it. If not, you may feel comfortable skipping it and putting that money aside for emergencies instead. Remember, though, no one expects their car to be written off!
We hope you’ve enjoyed reading and found this helpful. If you’re still in need of answers, feel free to get in touch with us.
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Luke Sanderson
Luke is our resident copywriter, combining plenty of automotive experience, particularly in car sales with a commitment to well-researched, extensive writing. He draws on his own experiences, as well as quizzing the entire team at Direct Gap to ensure the blogs and articles you read are worthwhile, valuable and accurate. Got a question for Luke? Drop us a DM on social media and he'll be happy to help.
