What is GAP insurance?
GAP insurance is an entirely optional form of insurance and some people will have a greater need for it than others.
Without GAP insurance in force, if your car is written off, you'd only have your motor insurer's valuation of the vehicle coming your way. If you have finance outstanding on your written-off vehicle, your motor insurer's valuation of the vehicle may not be sufficient to clear the outstanding balance, in which case, you'd have to use your own funds to both clear the remaining finance on the written off vehicle and fund a replacement vehicle.
Of course if you had no finance outstanding at the time of write-off, then in theory you could use your motor insurer's valuation of the vehicle to buy a vehicle of a similar age, condition and mileage as your vehicle at the time it was written off but, if you wanted anything newer or better etc, you'd have to use some of your own funds to cover the difference.
There are different types of GAP cover but, Invoice GAP insurance for example, would aim to top-up your motor insurer's valuation of the vehicle at the time of claim to the original invoice price that you paid for your now written-off vehicle when you first bought it. If you have finance outstanding you would use this original invoice amount to clear some or all of that outstanding finance and any remaining funds would be yours to use against the cost of your next car. Of course, if you had no finance outstanding then you'd have this original invoice amount entirely at your disposal to buy another car with.
Do you need it?
Ultimately, if you have sufficient funds at your disposal to comfortably afford to stand the combined cost of clearing any finance outstanding (where applicable) and replacing your vehicle in the event it's written off, you probably don't need GAP insurance. However if you could not comfortably afford to replace your vehicle or, you'd prefer that your own savings were not 'hit' substantially by the cost of replacing your vehicle if it was written off, therein lies the need for GAP insurance.