Car GAP Insurance

What Is Car GAP Insurance?

Car GAP insurance provides cover in the event of a total loss claim where the payout from the insurance company is less than either any outstanding finance, the original value of the car or the cost of a replacement car.

There are a variety of different types of GAP insurance cover available:

Return to Invoice (RTI) GAP Insurance (Back to Invoice Gap Insurance)
This will cover the difference between the insurance payout and the original invoice total. This usually has to be purchased within 3 months of owning the car.

Return to Value (RTV) GAP Insurance
This works in the same way as RTI GAP Insurance and is for people who have owned their cars for over 3 months. The current value of the car will be set at the time the policy is taken out.

Contact Hire GAP Insurance (Lease Gap Insurance)
This will pay the difference between the amount paid out by the insurer and the settlement value due to the lease company.

Finance GAP Insurance
In the event of a claim, Finance GAP Insurance will pay the difference between the amount paid out by the insurance company and the total left on any finance or loan arrangements.

Replacement GAP Insurance
This will cover the difference between the amount the insurance company pays out and the cost of buying a car of the same age and specification again.

GAP Insurance – Is It Worth It?

Deciding whether GAP insurance is worth it is an individual choice. Let’s take a look at two examples:

If you buy a brand new car and plan to keep it for 3 years then RTI Gap Insurance may be considered. With this protection, if the car is a total loss in any of the 3 years of ownership you will still receive the original cost of the car.

  • Original Cost of Car - £20,000
  • Payout from insurance company in third year for total loss - £12,000
  • GAP Insurance payout - £8,000

However, if you purchase a car and only intend to own it for 12 months GAP Insurance might not be the correct choice. A number of car insurance companies guarantee a full payout in the first 12 months of owning a new car so you may already be covered.

  • Original Cost of Car - £20,000
  • Payout from insurance company in first year for total loss - £20,000
  • GAP Insurance payout - £0

Where To Buy GAP Insurance

GAP Insurance is regularly offered when purchasing a new or used car, however, the dealer is unlikely to provide the most competitive price.

It is often cheaper to go direct to an online GAP Insurance provider, so always shop around just like you would if you were buying car insurance.