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GAP stands for Guaranteed Asset Protection. There are several specific GAP insurance options but the overall purpose of this type of policy is to protect you financially in the event of a total loss claim.

Your car loses value over time and the more you use it. So if you’re one of the 34% unlucky enough to experience a write-off, the settlement from your car insurance company may only be a fraction of the vehicle’s original cost. This significantly limits your options for a replacement car, or creates a huge out-of-pocket expense. In simple terms, GAP insurance tops up your car insurance settlement after a total loss to help you afford a replacement vehicle.

GAP insurance is simple

If your car is written off by your car insurance company, your GAP insurance provider will negotiate a fair value settlement based on your car’s current market value. We will then top up this amount, usually to recuperate the car’s original invoice price, although this depends on the type of policy that you have. ALA GAP insurance claims are settled quickly so you can get back on the road in no time.

GAP insurance is available for wide-ranging vehicles: new or used, financed, leased or bought outright. But certain groups may particularly benefit from cover.

1. Cars bought on finance
2. Drivers in negative equity (where you owe more on car finance than the vehicle’s current market value)
3. Brand new cars that will depreciate rapidly
4. Car models known to depreciate very rapidly

Read about who GAP insurance covers

When might you not need GAP insurance?

1. If you don’t have comprehensive car insurance
2. If you’d be happy with limited used car replacement options
3. If you have the cash flow to buy a new car if necessary
4. If you’ve already paid off your financed car and have enough to put down a deposit for a replacement.

Dependent on the value of the vehicle and the term length of your finance agreement, policies range from around £100-£300 for multi-year coverage. ALA offer an online quoting tool that will clearly break down the costs and payment options.

GAP insurance covers various financial shortfalls after a total loss. Back to Invoice insurance covers the shortfall between your market value settlement and the amount you originally paid for the car, OR the outstanding loan balance if this is higher. Vehicle Replacement GAP insurance covers up to the replacement cost for a new car (similar to your original car when you bought it) OR the outstanding finance if this is higher. Contract Hire GAP insurance covers shortfalls associated with writing off a leased car, such as outstanding rental payments and your initial deposit. Finally, Agreed Value GAP insurance offers excellent protection against depreciation during your GAP contract.

Read more about what GAP insurance covers 

What does GAP insurance not cover?

Crucially, GAP insurance doesn’t cover the following vehicles and scenarios:

• Vehicles that don’t have comprehensive car insurance
• Negative equity carried over from another finance agreement
• Any claim resulting from or involving illegal activity
• Vehicles with any unauthorised modifications
• Incidents that don’t result in an official write-off
• Excluded vehicles, such as courier, tuition or emergency service vehicles

Read more about what GAP insurance doesn’t cover

There are two types of negative equity. Unlike finance gap, GAP insurance always the type of negative equity where you owe more than the car’s current market value. Unfortunately, the type of negative equity transferred from a previous finance agreement is excluded.

Read about when GAP insurance covers negative equity

Some comprehensive car insurance providers include new-for-old replacement within the first year if you write off a brand new car. However, ALA can offer extended eligibility requirements (up to 365 days) for drivers with this kind of cover, so you’re still able to reap the full benefits of GAP insurance. It’s also important to note that not all comprehensive car insurance policies will offer vehicle replacement cover, in these cases, GAP cover is a smart choice.