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Gap car insurance
Getting a new car can be an extremely satisfying experience, but it’s worth doing your research before you drive away and enjoy that new car smell. Whenever a car is written off or stolen, your insurer will pay you what it’s worth at the time – and this is usually less than the price you bought it for.
This effect is most pronounced when you get a brand-new car because simply driving it off the forecourt devalues it. That’s where Gap insurance comes in.
On this page, you’ll learn everything you need to know about Gap car insurance, including how it works, what it’s for and the different types available.
What is gap insurance?
GAP insurance, or Guaranteed Asset Protection insurance, effectively bridges the gap between the price of your brand-new car and what the insurer would usually pay out should it be written off or stolen. Simply put, Gap insurance covers the difference between these two amounts, so you don’t lose money.
Vehicle replacement cover
This covers the difference between the current value of your car and the cost of replacing it with an identical model. If your car has become more expensive since you bought it, vehicle replacement cover ensures you don’t lose out.
Return to invoice
This covers the difference between the maximum amount your insurer will pay you, and the exact amount you paid for the car; i.e the price on the invoice.
Return to value
This pays the difference between the value of your car as its written off or stolen, and its value when you originally took out your Gap policy. Return to value insurance is aimed at second-hand buyers.
Our expert says
New cars are notorious for losing value as soon as they leave the dealer forecourt. Gap insurance stops you from being stung by depreciation should the worst happen, and your car is written off or stolen. Dealers may offer you Gap insurance when you buy the car, but make sure you shop around first." - Curtis Moldrich - Automotive Journalist
How much is Gap insurance?
Gap insurance tends to be expensive because it’s almost always associated with brand new cars – or at least ones no more than seven years old. However, the make and model of the car you purchase Gap insurance with will make the most difference. Expensive cars are hit by depreciation harder than cheaper ones, and because they’re at risk of losing even more value, their Gap insurance costs are higher.
How can you make Gap insurance cheaper?
Voluntary excess
It’s possible to cut costs by upping your voluntary excess and agreeing to pay more before the insurance company pays the rest. However, while it may seem like a great idea to hike your voluntary excess up, remember that you may have to pay it one day – so make it affordable
Rethink the type of Gap insurance you need
Return to invoice policies tend to be cheaper, while vehicle replacement policies tend to be on the more expensive side. Before you purchase Gap insurance, double-check what your needs are and work out what type is best for you.
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FAQs
Do you need Gap insurance?
Gap insurance is predominantly associated with brand new cars due to the high levels of depreciation they experience, but it can be used with any car under seven years old. Older than that and insurers won’t consider the car new anymore.
What does Gap insurance pay for?
Gap insurance is designed to bridge the difference between the price an insurer will pay out for a vehicle and its value when new. Gap insurance is primarily aimed at new car buyers, because cars depreciate most just after rolling out of the dealership – but it can be purchased for any car less than seven years old.
Useful information
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Please note:
- Cashback is only available for genuine quotes.
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*Cashback rates - £2 per valid gap insurance purchase.