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Designed for Close Brothers Motor Finance customers, GAP Insurance provides comprehensive cover following a write-off
What is GAP Insurance?
If your car is written off, your main insurer will usually pay its market value at the time of the incident. Unfortunately, this is often much lower than the price you originally paid, or the amount still owed on finance.
GAP Insurance bridges that shortfall, topping-up the difference between your insurer's payout and your car's original invoice price, or any remaining finance still owed. It helps you avoid financial loss on a vehicle you can no longer drive.
Designed for new or used cars on a Personal Contract Purchase (PCP) and Hire Purchase (HP).
RTI pays the difference between the “invoice value” and the market value your insurer pays if your car is written off. RTI is available for up to six months following purchasing your vehicle.
Car insurance helps cover the cost of repairs or replacement if your car is damaged or stolen, but it only pays out based on your car's current market value, not the price you originally paid for it.
A GAP insurance policy helps cover the difference between what your car is worth at the time of an accident or theft and what you paid for it, or still owe on it. If your car is written off, GAP insurance steps in to make sure you're not left covering the remaining balance.
In simple terms, car insurance takes care of the damage, but GAP insurance helps cover any financial gaps, ensuring you're not left with a big bill.
All cars lose value (depreciate) as they get older and accumulate mileage, with some cars losing up to 60% of their original value in the first 3 years. This drop in value is often faster than the rate at which you pay off any car finance.
If your car is written off or stolen, your main car insurance payout will be based on its current market value. This can leave a "shortfall" or "gap" which may not be enough to clear your remaining finance balance. GAP Insurance is designed to cover this difference.
Having a car written off can be an extremely stressful event. Having to continue paying off a finance agreement for a car you no longer have can make matters even worse. With GAP Insurance, you have peace of mind that should the worst happen, you'll receive an additional payout to clear the debt and help fund a replacement vehicle.
GAP insurance typically costs around £200 for 3 years of coverage, though policies for 2 or 4 years are also available. It is generally more suited to newer vehicles, as cars tend to lose the most value in their first few years, creating a larger potential financial gap.
While it's not a legal requirement, GAP insurance is highly recommended if you've bought a car on finance. If your car is written off, your car insurance will likely only pay out its current value, which might be less than what you still owe. GAP insurance covers that difference, protecting you from a significant financial loss.
No, unlike standard motor insurance, GAP insurance is not a legal requirement. However, it is an effective way to protect yourself from financial loss if you are concerned about the gap between an insurer's payout and your outstanding finance.
You can get a GAP insurance policy at any time, but it's best to arrange it as soon as you buy your car. Many providers have a time limit on when you can purchase a policy after buying the vehicle. Acting early ensures you are fully protected from day one.
The amount GAP Insurance covers can vary significantly depending on the policy and the vehicle type. Vehicles whose value depreciates faster will typically have a larger potential shortfall to cover, influencing the payout amount in the event of a claim.
GAP insurance doesn't pay the full value of the car, but it does cover the specific financial gap between your main car insurance payout and either the amount you originally paid for the car or what's left on your finance agreement. It may not cover additional costs like your insurance excess or other fees, so it's important to check your policy.
Shortfall insurance is another term for GAP Insurance. It refers to a policy that bridges the financial gap between your car insurance payout and the vehicle's original value or outstanding finance amount in the event of a total loss.
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