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Gap Insurance Comparison Guide

Compare Features, Prices, Providers and Different Types of Gap Insurance


This guide has been designed to help you compare the essential features, policy types, providers and therefore, the best prices for Gap Insurance. Once you know exactly what to look for, you can make an informed decision on what really is the best deal and option for you.


We are very much aware of the dealership and finance companies offering Gap Insurance at usually what is a very expensive price and we are also aware of certain things that might be said to encourage you to pay more than you have to for this level of insurance. This guide should help to give you that reassurance that the prices and policies you will find independently, are just as good, if not better than the main dealership.


What is Gap Insurance?


Gap Insurance or Guaranteed Asset Protection Insurance to give it its full title, is designed to bridge the gap between your own motor insurance settlement (in the event of a total loss) and depending on which level of cover you choose, either the original invoice price you have paid, the cost to replace the vehicle with another 'like for like' or simply, the amount outstanding on finance.


Do you need Gap Insurance?


You don't legally need Gap Insurance to drive the vehicle on the road in the UK, however, it may be a good idea. If your vehicle is declared a total loss, your own motor insurance policy may only give you the value of the vehicle at that moment in time and due to depreciation, that figure is likely to be a fraction, of the price you had originally paid, the cost to replace it and in some cases less than what is owing on the finance agreement. Therefore, without Gap Insurance you could be left with no car and paying off the remaining amount outstanding on the finance agreement.


Even if you don't have any finance on the vehicle, Gap Insurance can still be a good idea. Current rates of depreciation indicate that the average vehicle is likely to lose between 50% - 60% over a three year term. Therefore, if you have paid £20,000 for a car and three years later it's declared a total loss, you may only get back a figure of £9,000 - £10,000. With a form of Gap Insurance, you can protect the original invoice price you paid (£20,000) or the cost to replace the vehicle with another 'like for like', even if that has increased.


There are different types of Gap Insurance, all of which will have a different aim and ability in terms of how the policy should perform in the event of a claim. However, all forms of Gap Insurance should have a number of comprehensive customer friendly features, that come as standard. Below you will see a list of features you should expect to find within a comprehensive level of cover.


Important Gap Insurance Features

With any form of insurance there are features that come as standard that contribute to the overall ability of the policy and the way in which it performs should you need to make a claim. With a Gap Insurance policy the features below have been highlighted as being independently 5 star rated and something you should look out for when purchasing Gap Insurance.


  • Transferable

The ability to transfer your policy to another vehicle, providing it fits the same criteria, should you change your vehicle slightly earlier than expected.

  • Excess Contribution

There is no excess for you to pay when making a claim, instead you should expect a contribution of at least £250 towards your own motor insurance excess, in the event of you needing to make a claim.

  • Suitable Claim Limit

Gap Insurance is a financial top up that takes you from your motor insurance settlement figure back up to either, the amount outstanding on the finance, the original invoice price or the cost to replace the vehicle with another 'like for like' model. However, if you don't have a suitable claim limit, you could still be left short.

  • Cancellation

It is a legal requirement to have at least 14 days cooling off with a Gap Insurance policy and most comprehensive options will give you as much as 30 days to cancel and obtain a full refund. After that, you should be entitled to cancel your policy and obtain a pro rata refund, which is usually less a cancellation fee.

  • Factory Fitted Options & Dealer Fitted Options

A comprehensive Gap Insurance policy should cover 100% of all factory fitted options and at least £1500 worth of dealer fitted options. 


Gap Insurance Prices


What should you be paying for Gap Insurance? Your dealership are likely to have quoted you a price of upwards of £300 for the standard level of cover. However, if you look around online, you should be able to find a quotation at a fraction of the price the dealership will be charging.


This guide has been designed to give you all the information you need to make an informed choice on Gap Insurance, where to buy it, what level of cover to buy, how much you should be paying or even whether or not you need it. Providing you are happy with the policy features included, the ability of the policy and how it performs, the price you pay is only a bonus.


Price is usually an indication of quality, however, this is not the case with Gap Insurance and instead is an indication of where you have purchased the policy from, rather than how the policy performs should you need to use it. The same with any product or service you buy online, if you shop around you may be able to find the same product or service for a much better price.


Which? Consumer magazine has compiled a report on Gap Insurance and completed a comparison table showing the different providers, features and the prices charged for the different providers. Martin Lewis Money Saving Expert has also produced a report on Gap Insurance, advising customers to consider independent retailers online.


Gap Insurance Providers


You will be able to find as many as ten different providers when looking at different Gap Insurance providers online, all of which should be more cost effective than the dealership policy. This is because independent retailers of Gap Insurance are only charged the standard rate of insurance premium tax at 12% compared to a dealership, who are charged at the same rate as VAT at 20%.


Supplier rates also have a big impact on the prices quoted for Gap Insurance. As with any purchase, the more you buy, the better the price and that is the same for Gap Insurance. Due to the volume of Gap Insurance policies sold online, the prices are expected to be considerably less than that quoted via the dealership or the finance company for example.


Being part of Aequitas Automotive Limited, we act in a similar way to a broker and have four different Gap Insurance specialist brands for you to consider, all of which will have different features and prices. Easy Gap, Gap Insurance 123, and are all owned and operated by Aequitas Automotive Ltd. 


At Aequitas, we pride ourselves on customer service and giving the consumer all of the information needed to make the best decision. If you choose to contact a member of the customer service team at any stage, each member of the team will have the ability to run through the differences between each brand to find the most suitable policy for you and highlight the benefits of each choice. The main reason we have the different brands is to give you the choice of features and benefits whilst also providing different solutions for different circumstances.


Different Types of Gap Insurance


There are a number of different types for you to consider, some more suitable for certain circumstances and others more comprehensive providing they're applicable to your situation. In the majority of circumstances, you will have the ability to purchase either Combined Return to Invoice or Combined Vehicle Replacement Gap Insurance, but what's the difference between the two?


With a Combined Return to Invoice Gap policy, should the vehicle be declared a total loss, this policy will top you up from your own motor insurance settlement figure and take you back up to the original invoice price you have paid for the vehicle. The combined element is if you owe more on the finance agreement than the original invoice price you have paid, settlement would instead be based on that figure.


A Combined Vehicle Replacement policy is seen as being the most comprehensive option, due to the fact that you have the ability to protect more than the purchase price you have paid for the vehicle. Rather than settlement being based on the original invoice price you have paid for the vehicle, instead, settlement is based on the cost to replace the vehicle with another 'like for like' model. 


The combined element with this one is the exact same, if you owe more on the finance than the cost to replace the vehicle, settlement will instead be based on the outstanding finance amount. This policy may also have a Return to Invoice element to it, if the invoice price that you originally paid for the vehicle is higher than both, the amount outstanding on finance and the cost to replace the vehicle with another 'like for like' model, settlement would instead be based on the invoice price.


This feature may not be available on all Vehicle Replacement Gap Insurance policies so be sure to double check the terms and conditions or ask the question.


If you have taken a vehicle on a form of finance where you have no option to own the vehicle at the end of the agreement, there is only one policy applicable to you and that is a form of Contract Hire/Lease Hire/Finance Gap Insurance. The idea of this policy is to clear the amount owing on the finance agreement, ensuring you walk away with no outstanding liability. Because you don't have the option to own the vehicle as part of the agreement, unfortunately you don't have the ability to protect the price of the vehicle or the cost to replace it. 


More recently, you will also have the option of protecting your initial rental or deposit amount you have put down on the vehicle. This is likely to be an additional option and may have an additional cost attached to the extra ability. This means that in the event of a total loss, your outstanding liability is cleared and your deposit/initial rental is returned to you. This is usually limited to a maximum amount of £3,000 with some providers being limited to a maximum of £2,000.



Ensure you get the best deal ...


Consider the different types of Gap Insurance and decide which level of cover is best for you. After deciding which type of Gap Insurance is best for you, shop around and find the policy with the most comprehensive features and ensure that you find the best priced policy with the comprehensive features that matter.


Price is an indication of quality, however, with any form of insurance, the features and the way in which it performs is more of an indication of quality than price, if it's a better price and has better features, that's the best deal for you.