What does GAP insurance cover?
The short answer: GAP insurance can provide an additional payment if your vehicle is declared a Total Loss following a valid motor insurance claim. The most common causes are accident, fire, theft and flood.
What the GAP policy aims to protect depends on the type of cover you have.
Invoice GAP can protect the original vehicle invoice price, Replacement GAP can protect the cost of an equivalent brand-new replacement vehicle, Contract Hire GAP can protect against a lease termination shortfall, and Top-Up GAP can increase the motor insurer's Total Loss valuation by 25%, up to the policy's £10,000 claim limit.
GAP insurance is not simply there to clear vehicle finance. Some types can protect your deposit, capital already repaid and original investment by working back to the vehicle's invoice price or an equivalent replacement cost.
When can GAP insurance respond?
A GAP insurance claim normally starts with a valid claim under your motor insurance policy. Your vehicle must then be treated as a Total Loss (aka "written off") rather than repaired.
This most commonly happens when the vehicle is:
- stolen and not recovered;
- damaged beyond economical repair in an accident;
- destroyed or seriously damaged by fire; or
- damaged by flooding to the point that it is written off.
The motor insurer must accept and settle the claim. The vehicle, its use and the circumstances of the loss must also meet the GAP policy's terms and conditions.
Once the motor insurer's Total Loss valuation and any other relevant figures are known, the GAP claims administrator can calculate whether an insured shortfall exists and how much the policy can pay.
What do the different types of GAP insurance cover?
Different GAP policies protect different financial positions. See below for details.
Invoice GAP
Aims to top up the motor insurer's Total Loss valuation to the higher of either the original vehicle invoice price or the finance agreement settlement figure, if applicable, at the time of claim.
Learn about Invoice GAPReplacement GAP
Provides everything that Invoice GAP does, but can also top up to the cost of an equivalent brand-new replacement vehicle at the time of claim, if that figure is higher.
Learn about Replacement GAPContract Hire GAP
Aims to cover the difference between the motor insurer's valuation and the early termination fee you are required to pay the leasing company. It can also protect some or all of your initial rental.
Learn about Contract Hire GAPTop-Up GAP
Increases the motor insurer's Total Loss valuation by 25%, up to the policy's £10,000 claim limit. It does not aim to restore a particular invoice price or replacement cost.
Learn about Top-Up GAPClearing finance is not the same as restoring your investment. Standalone Finance GAP may only cover the difference between the motor insurer's valuation and the eligible finance settlement. It would not normally restore your deposit, capital already repaid or original invoice price.
What else can a GAP insurance policy cover?
Depending on the policy and options selected, additional protection may include:
- A contribution towards the motor insurance excess. The amount varies between policies and underwriters.
- Factory-fitted options. Our current policies include the cost of factory-fitted options and accessories when establishing the covered vehicle price.
- Eligible dealer-fitted options. Our current policies include up to £1,500 of eligible dealer-fitted options and accessories.
- Contract hire initial rental. Contract Hire GAP can reimburse an eligible initial rental, subject to the policy limit.
- Optional negative equity protection. Cover for an eligible amount brought forward from a previous vehicle may be available with selected Invoice and Replacement policies.
- Total Loss Courtesy Car cover. This may be available as an optional addition to selected policies.
Not every benefit is included in every policy. The quotation, Insurance Product Information Document and policy wording will show exactly what applies.
What does GAP insurance not cover?
GAP insurance is designed to protect an eligible financial shortfall after a Total Loss. It is not a maintenance plan, warranty or replacement for motor insurance.
It will not normally cover:
- repairs when the vehicle has not been declared a Total Loss;
- mechanical or electrical breakdown;
- servicing, maintenance and ordinary wear and tear;
- personal injury or damage caused to another person, vehicle or property;
- a loss rejected by the motor insurer;
- finance arrears, late-payment charges and other ineligible finance costs;
- negative equity brought forward from a previous vehicle unless the relevant protection was selected and applies;
- costs relating to road tax, fuel, paint or upholstery protection, service plans, extended warranties and insurance premiums;
- ineligible modifications or accessories beyond the policy allowance; or
- an excluded vehicle, use or circumstance listed in the policy wording.
Exclusions and limits vary. Always check the current wording for the particular policy rather than relying on a general list.
Does GAP insurance cover reductions made by the motor insurer?
Not necessarily. A GAP policy is not intended to make good every deduction from the motor insurer's settlement.
The GAP claim may be calculated using the vehicle's proper market value before deductions made for matters such as:
- contributory negligence;
- pre-existing damage or poor vehicle condition;
- an unpaid motor insurance premium; or
- other deductions arising under the motor insurance policy.
This can leave the customer responsible for the amount deducted. A contribution towards the motor insurance excess may be available where the GAP policy specifically provides it, but it remains subject to the stated limit.
You should contact the GAP claims administrator before accepting a motor insurer's valuation. If the valuation is lower than the vehicle's proper market value, GAP insurance should not be treated as a substitute for challenging that valuation.
Learn why motor insurer valuations and market-value clauses matter
See how the cover works in real claims
Our claim examples show how Invoice, Replacement, Contract Hire and Top-Up GAP protected four different customers after their vehicles were written off.
They include the motor insurer's valuation, the other figures used in the calculation and the final GAP insurance payment.
What should I check before buying?
- What figure will the policy aim to protect?
- What is the claim limit and how is it assigned?
- Which excess contribution and additional benefits apply?
- Are your vehicle, purchase date, mileage and intended use eligible?
- How are factory options, dealer accessories and later modifications treated?
- Does the finance include previous negative equity or additional products?
- What must you do before accepting the motor insurer's settlement?
Check our current GAP insurance claim limits or read our Complete Guide to GAP Insurance.
Frequently asked questions
What does GAP insurance cover on a car?
GAP insurance can provide an additional payment if your vehicle is declared a Total Loss following a valid motor insurance claim. Depending on the type of policy, it can protect the original invoice price, the cost of an equivalent replacement vehicle, an eligible contract hire termination shortfall or a percentage above the motor insurer's valuation.
Does GAP insurance cover theft?
GAP insurance can respond if a stolen vehicle is not recovered and the motor insurer accepts the claim and settles it as a Total Loss, subject to the GAP policy terms.
Does GAP insurance cover fire and flood damage?
It can respond when fire or flood damage results in a valid motor insurance claim and the motor insurer declares the vehicle a Total Loss. GAP insurance does not pay for repairs where the vehicle is not written off.
Does GAP insurance cover mechanical breakdowns or repairs?
No. GAP insurance is Total Loss shortfall protection. It is not a warranty, breakdown policy or substitute for motor insurance, and does not pay for routine repairs, servicing, maintenance or wear and tear.
Does GAP insurance cover the motor insurance excess?
Some GAP policies can contribute towards the excess deducted by the motor insurer. The amount depends on the policy selected and is subject to its terms and claim limit.
Does GAP insurance cover negative equity?
Negative equity brought forward from a previous vehicle is not automatically covered. Optional protection may be available with some eligible policies, so the quotation and policy wording should be checked.
Does GAP insurance replace comprehensive motor insurance?
No. GAP insurance works alongside motor insurance and normally requires a valid motor insurance claim. It does not provide the legal or everyday protection supplied by a motor insurance policy.
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About David Burns-Keane
David Burns-Keane founded GAPinsurance.co.uk in March 2004, establishing what he understands to have been the UK's first independent, specialist, direct-to-consumer online GAP insurance provider.
For more than two decades, David has sought to champion the interests of GAP insurance customers. His focus has not simply been on challenging high motor dealer prices, but on clearer explanations, stronger policy wording and improved terms and conditions so that customers can identify cover offering meaningful protection and genuine value.
David remains closely involved in how the policies offered through GAPinsurance.co.uk are designed, explained and supported. This guide was written and reviewed by him.
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