GAP Insurance UK: Everything You Need to Know in 2025

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 ‘gap’ between your car insurer’s payout and what you originally paid for your vehicle (or still owe on finance) if your car is written off or stolen. 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.

How Does GAP Insurance Work?

Here’s a simple example:

You buy a car in January 2025 for £25,000.
Later that year, the car is stolen or written off.
Your motor insurer pays out the current market value, which may only be £19,000.
If you have GAP insurance, it covers the £6,000 shortfall, putting you back in the position you started in.

Types of GAP Insurance in the UK

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

Return to Invoice (RTI) GAP – Covers the difference between your insurer’s payout and the original invoice price you paid.
Vehicle Replacement GAP – Covers the cost of replacing your car with a new one of the same make, model, and spec (even if prices have gone up).
Finance GAP – Pays off the remaining balance on your finance agreement if it’s higher than your insurer’s payout.
Lease GAP – Designed for leased cars, covering outstanding rental payments and potential penalties.

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 worth only a few thousand pounds, GAP insurance may not be necessary.

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.

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.

Thinking about GAP insurance? At Quote My Gap, we make it simple, affordable, and transparent — so you’re covered if the unexpected happens.

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