GAP insurance


GAP (guaranteed asset protection) is a type of insurance policy that provides protection and reassurance to car finance customers.

GAP insurance covers the shortfall between the value of your car and the finance owed, if it’s stolen or written-off during your contract.


How does GAP insurance work?

If your car is written-off, standard insurance will cover the current market value for the vehicle at that the time of the accident.

But if you’ve taken out car finance and the value of the car is less than the amount owed, you’re required to continue your monthly payments until the finance is settled.

So essentially, you could be paying for a car that you can no longer drive.

And unless you have the additional cash to spare, you may be stuck without a vehicle to drive.

With GAP Insurance, your insurer will provide a total loss settlement and the GAP insurance will cover the difference between the market value and the finance owed.

As a result, you’re not left out of pocket or stuck paying for a car that you’re unable to drive.


GAP insurance example 

To understand GAP insurance in more detail, let’s take an example.

Caitlin has a 48-month car finance agreement for a brand-new Renault Clio. The purchase price of her vehicle was £16,000, and her total amount payable with interest, is £18,000.

After 1 year, Caitlin has repaid £5,400, but unfortunately her Clio was written-off in an accident. Caitlin’s car has depreciated by 40%, so her insurance will only pay the current market value of £9,600.

This leaves Caitlin with a shortfall of £3,000. Without GAP insurance Caitlin must continue repaying her loan, until the finance is settled.

If Caitlin had GAP insurance, she could have claimed the shortfall of £3,000, enabling her to settle her outstanding finance.


RTI GAP insurance vs GAP insurance

RTI GAP works similarly to GAP insurance, but instead of covering the shortfall between the current market value of the vehicle and the remaining finance, RTI GAP covers the shortfall between the original purchase price of the vehicle and the amount paid out by the insurer.

So, in addition to helping you settle the outstanding finance on your agreement, you’ll also have spare funds to put towards replacing your vehicle.

Find out more about RTI GAP Insurance here.

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