{"id":60,"date":"2026-01-29T14:15:40","date_gmt":"2026-01-29T14:15:40","guid":{"rendered":"https:\/\/gapinsurance.co.uk\/blog\/?page_id=60"},"modified":"2026-01-29T14:15:45","modified_gmt":"2026-01-29T14:15:45","slug":"how-does-replacement-gap-insurance-work","status":"publish","type":"page","link":"https:\/\/gapinsurance.co.uk\/blog\/replacement-gap-insurance\/how-does-replacement-gap-insurance-work\/","title":{"rendered":"How Does Replacement GAP Insurance Work?"},"content":{"rendered":"

In the event of your vehicle being declared a Total Loss (aka \u201cwritten off\u201d) as a result of an accident, fire, theft or flood, your comprehensive Motor Insurance policy settlement will be based on the depreciated market value of your vehicle at the time of the claim.<\/p>\n

How Replacement GAP insurance<\/a> then works, depends on whether you bought the vehicle cash outright or, you financed it.<\/p>\n

We\u2019ll deal with both examples below and for the purpose of each example, we\u2019ll use the same figures that we used in How Does Invoice GAP insurance Work?<\/a> example: e.g. we’ll assume you bought the car originally for \u00a322,000 and that its total loss valuation at the time of claim is now \u00a310,000, but in this case we’ll also assume that the cost of a brand new equivalent vehicle has now increased to \u00a324,000.<\/p>\n

Replacement GAP insurance for a Cash Buyer<\/h3>\n

If your comprehensive motor insurance policy values the vehicle that you bought for \u00a322,000 at \u00a310,000, this represents a \u00a312,000 \u201cgap\u201d (covered by Invoice GAP insurance).\u00a0 But in this example the cost of a brand new equivalent vehicle has since increased to \u00a324,000 which increases the “gap” to \u00a314,000.<\/p>\n

For a cash-buyer, a Replacement GAP insurance policy would be aiming to cover this \u00a314,000 gap between the \u00a310,000 total loss valuation of the vehicle and the \u00a324,000 cost of replacing the vehicle with a brand-new equivalent vehicle at the time of claim.<\/p>\n

This means through the combined payouts of both your Car and GAP insurance policy claims, you’d have \u00a324,000 at your disposal to replace the vehicle that you originally bought for \u00a322,000.<\/p>\n

Replacement GAP insurance for a Financed Car<\/h3>\n

In this example we\u2019ll use the same figures as above (\u00a322,000 original purchase price with a \u00a310,000 total loss valuation and a brand-new vehicle having increased in price to \u00a324,000) but we\u2019ll also throw a \u00a312,000 finance agreement settlement figure in to the mix.\u00a0 So\u2026<\/p>\n

The car you bought for \u00a322,000 has just been written off, and it\u2019s been valued at \u00a310,000 but, you owe the finance company \u00a312,000 and a brand-new version of the same vehicle is now \u00a32,000 more expensive than you paid originally.<\/p>\n

Without Replacement GAP insurance:<\/h4>\n

In this example, if you did not have Replacement GAP insurance, you\u2019d need to be funding the \u00a32,000 shortfall to the finance company out of your own personal funds, plus you\u2019ll also need to fund the replacement vehicle too, including the \u00a32,000 higher cost of buying the same vehicle again.<\/p>\n

With Replacement GAP insurance:<\/h4>\n

In this example, Replacement GAP insurance would be aiming to top-up the \u00a310,000 total loss valuation of the vehicle to the \u00a324,000 cost of replacing the vehicle with a brand-new equivalent.\u00a0 In theory you\u2019d then have \u00a324,000 to clear the \u00a312,000 you still owe the finance company and, you\u2019d be left with \u00a312,000 to put towards the cost of replacing your now written off vehicle.<\/p>\n

Ts & Cs apply.<\/p>\n

Additional cover options available:<\/h5>\n

Optional: Prior-Vehicle Negative Equity Cover<\/strong><\/p>\n

If you\u2019re part-exchanging an old vehicle against the new vehicle purchase, and you\u2019re re-financing negative equity from the old vehicle as part of the purchase of the new one, you can upgrade your GAP insurance cover to include cover for up to \u00a32,000 of negative equity brought forward from your previous vehicle.<\/p>\n

Optional: Total Loss Courtesy Car cover (TLCc)<\/strong><\/p>\n

In the event of an incident occurring with your vehicle, your motor insurer will normally provide you with a courtesy car, but often only up and until they deem the vehicle to be a total loss (aka a \u201cwrite off\u201d), after which they\u2019ll often take their courtesy car back pretty quickly.<\/p>\n

To protect you from this, you can upgrade your GAP insurance cover to include the provision of a courtesy car for you to use for up to 28-days in the event of a total loss event.\u00a0<\/p>\n

Read more about Total Loss Courtesy Car cover (TLCc), here<\/a>.<\/p>\n\n\n

GET A REPLACEMENT GAP INSURANCE QUOTE<\/strong><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

In the event of your vehicle being declared a Total Loss (aka \u201cwritten off\u201d) as a result of an accident, fire, theft or flood, your comprehensive Motor Insurance policy settlement will be based on the depreciated market value of your vehicle at the time of the claim. How Replacement GAP insurance then works, depends on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":57,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-60","page","type-page","status-publish","hentry"],"yoast_head":"\r\nHow Replacement GAP insurance works - GAPinsurance.co.uk<\/title>\r\n<meta name=\"description\" content=\"Read our guide to how Replacement GAP insurance works in the event your vehicle is written off through accident, fire, theft or flood.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/gapinsurance.co.uk\/blog\/replacement-gap-insurance\/how-does-replacement-gap-insurance-work\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_GB\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"How Replacement GAP insurance works - 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