Everything You Need To Know In 2025

GAP Insurance Article

When you drive a brand-new car off the forecourt, it starts to lose value straight away. In fact, most cars can lose 20–30% of their value in the first year alone. That’s where GAP insurance comes in. In this guide, we’ll explain exactly what GAP insurance is, how it works in the UK, and whether it’s worth considering for your next car purchase in 2025.

What is GAP insurance?

GAP (Guaranteed Asset Protection) insurance is designed to cover the shortfall between your insurer’s payout (the market value at the time your vehicle is written off or stolen) and either:

What you originally paid,
The amount you still owe on finance, or
The cost of a brand-new replacement.

Without GAP cover, you could be left out of pocket by thousands of pounds — especially if you financed your car or bought a brand-new model.

Do you really need GAP insurance in 2025?

Not everyone needs GAP cover, but it’s worth serious thought if:

You’ve bought a brand-new car (which depreciates quickly).
You’re on a PCP or HP finance deal.
You’ve taken out a long-term lease.
You want peace of mind knowing you won’t be left with debt if the worst happens.

On the other hand, if your car is older or cost only a few thousand pounds, GAP insurance may not be necessary.

Woman signing car finance agreement with dealer.

Types of GAP insurance in the UK

There isn’t just one type of GAP cover. The right option depends on how you bought your car:

Return to Invoice (RTI) GAP – Covers the shortfall between your insurer’s payout and the price you paid. Widely recommended for brand-new vehicles.
Vehicle Replacement GAP – Covers the cost of replacing your car with the same make/model, even if the price has gone up.
Finance GAP – Pays off the remaining balance on your finance agreement if your car is written off and your insurer’s payout isn’t enough.
Lease GAP – Covers early termination payments and potential penalties.

Dealer GAP insurance vs online GAP insurance

Car dealerships often push GAP insurance, but their policies can be 2–3 times more expensive than buying online. Since 2015, UK law requires dealers to give buyers a two-day cooling-off period before selling GAP insurance, so you have time to shop around. By choosing a specialist provider like Quote My GAP, you can often get the same level of protection for a fraction of the price.

GAP insurance for electric & hybrid cars

With the rise of EVs in 2025, GAP insurance has become even more relevant. Electric cars often depreciate faster than traditional petrol or diesel models, meaning the payout gap can be much larger if one is written off.

Key takeaways

GAP insurance covers the shortfall between your insurer’s payout and what you paid (or still owe).
It’s most useful for new cars, finance deals, and leases.
Buying online is usually much cheaper than at the dealership.
In 2025, with rising car prices and fast depreciation, GAP insurance is more valuable than ever.

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