Skip to main content

What Is GAP Insurance and Do You Need It?

What Is GAP Insurance and Do You Need It?Photo from Unsplash

Originally Posted On:



GAP, or Guaranteed Asset Protection, insurance protects your vehicular investments in cases of a total loss due to an accident or theft. If you owe more on your car loan than the actual value of your vehicle, GAP insurance pays the difference.

When you buy a new or used car, motorbike, motorhome, or van, you will likely do everything you can to protect your investment. You might get an extended warranty from the dealership, a service contract, or even roadside assistance. But if you were to have an accident or your car was stolen, your insurer would only pay for the current value of the vehicle, which may be less than what you paid or owe if you have a loan.

GAP insurance, in the simplest of terms, protects you financially if your vehicle is totalled or stolen. GAP insurance covers the difference, or the “gap”, between the amount your regular insurance pays out on a claim and the value you paid for your vehicle.

For example, let’s say you bought a new car for £30,000. After two years, it was written off in an accident. Your regular vehicle insurance policy pays out £25,000 because that’s what the car is worth at the time of the accident. Leaving you short in comparison to what you paid for the vehicle. That’s where GAP insurance comes in. GAP insurance would cover the £5,000 difference so you wouldn’t be left financially short or stuck with a bill for a car you can’t even drive anymore.

What Are the Different Types of GAP Insurance?

There are four main types of GAP insurance: Return to Invoice (RTI), Vehicle Replacement Insurance (VRI), Return to Value (RTV), and cover for Contract / Lease hire

  • Return to Invoice (RTI) pays the difference between your insurer’s payout and the original invoice price of the vehicle if it’s written off or stolen within four years of ownership.
  • Vehicle Replacement Insurance (VRI) does the same thing but takes into account any depreciation that has occurred since you purchased the vehicle.
  • Return to Value (RTV) pays out based on the current market value of your vehicle at the time it’s written off or stolen – not necessarily what you paid for it originally.
  • Cover for Contract / Lease hire is similar to RTI but is designed specifically for people who lease their vehicles rather than purchase them outright.
Do You Need GAP Insurance?

GAP insurance is not a legal requirement in the UK but it can be very useful, especially if you’re financing a new car. Even though GAP insurance isn’t a requirement, it may be a good idea depending on your financial situation.

Should You Get GAP Insurance?
Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.