Gap Insurance and Moany more

What is GAP insurance?

GAP insurance protects you when you make an insurance claim and receive a payout that’s less than the cost or value of the car when you bought it. It will pay you the difference so you don’t lose money.

It’s mostly associated with new cars, although you can also buy GAP insurance alongside a second hand car under seven years old – after this the car is deemed old and insurance companies will not cover the gap.

Why have GAP insurance?

It’s well-known that new cars depreciate the minute they are driven off the forecourt.

If you drive 10,000 miles a year in your new car, it could lose 60% of its value after three years, the AA reports. The genuine rate of depreciation depends on make, model and usage, but as an example, a £20,000 car could be worth just £8,000 after three years.

If you bought your car with finance, you could be stuck making repayments for a vehicle you no longer have. And if you paid outright, you will be seriously out of pocket. In both scenarios, you may not be able to afford to replace the car with a similar, new model.

Taking out a GAP insurance policy prevents these worst-case scenarios from becoming reality.