Thinking about getting GAP insurance but unsure if it’s really worth the cost? In this guide, we’ll break down what GAP covers, when you need it, and when you can probably skip it. Whether you’re buying, leasing, or financing a car in the UK, this article will help you make an informed decision.
What Is GAP Insurance?
GAP stands for Guaranteed Asset Protection. It covers the “gap” between your car’s current market value and the amount you still owe on it—or what you originally paid—if your vehicle is stolen or written off.
For example:
- You buy a new car for £25,000
- It’s written off a year later and valued at £18,000
- You still owe £23,000 on finance
- GAP insurance covers the £5,000 shortfall
When Is GAP Insurance Worth It?
1. You’re Financing or Leasing a Car
When you lease or finance a vehicle, you may owe more than the car is worth, especially in the early years. GAP protects you from this risk.
2. Small Deposit or Long Loan Term
If you paid little upfront or spread your loan over 5+ years, depreciation may leave you “upside-down” on your loan. GAP coverage can save you from a financial hit.
3. You Bought a New Car
New vehicles lose value quickly—often 20–30% in the first year. If your insurer pays out less than what you owe, the insurance fills that gap.
4. Your Lease Agreement Requires It
Many lease contracts mandate GAP. Even if it’s optional, it’s worth considering due to the depreciation risks with leased cars.
When GAP Insurance Might Not Be Worth It
1. You Paid Cash or Own the Car Outright
If there’s no loan, there’s no gap to cover. You’ll just receive the car’s current market value if it’s written off.
2. You Bought a Used Vehicle
Used cars depreciate more slowly, meaning the difference between the vehicle’s value and what you owe is smaller—possibly too small to justify GAP insurance.
3. You Have Replacement Cover from Your Insurer
Some comprehensive car insurance policies offer “new car replacement” within the first year. Check your existing cover before buying extra GAP insurance.
How Much Does GAP Insurance Cost in the UK?
Prices vary depending on the provider and your vehicle type:
- Car dealerships: £300–£500 (often bundled into finance)
- Independent insurers: £150–£250 for 3 years of cover
Tip: You don’t have to buy GAP insurance from your car dealer. Independent providers usually offer much better value—compare quotes before buying. Try the common comparison websites!
Wasn’t GAP banned by the FCA?
The sale of GAP was ‘paused’ by the Financial Conduct Authority (FCA) for a short period in 2024. The regulator was concerned consumers weren’t getting fair value. Stricter conditions are now required by GAP providers.
Is GAP Insurance Worth It? Our Verdict
If you’re financing, leasing, or buying new, then yes it can be a smart financial safety net. But if you own your car outright or are buying used, it might not be necessary.
Before deciding, ask yourself:
- Would I owe more than my car is worth if it’s written off?
- Could I cover the loss out of pocket?
- Does my existing insurance already include replacement cover?
If there’s a risk of a financial shortfall, GAP insurance can give you peace of mind and protect your investment.
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