INSURANCE GUIDE
Return to Invoice GAP Insurance UK
What GAP insurance covers, how return to invoice differs from finance GAP, and when it is worth buying.
TL;DR
- GAP insurance covers the shortfall between your car insurer payout (market value) and what you paid or still owe.
- Return to invoice GAP pays back to the original invoice price; finance GAP pays off the outstanding finance balance.
- GAP is most valuable in the first three years when depreciation is steepest and the finance balance is highest.
- Dealers sell GAP insurance but it is also available independently at significantly lower premiums.
What GAP Insurance Is
When a car is written off or stolen, a standard comprehensive motor insurance policy pays the current market value of the vehicle at the time of the loss. Due to depreciation, this market value is almost always lower than the price originally paid for the car - sometimes significantly lower in the first year of ownership. GAP (Guaranteed Asset Protection) insurance covers this shortfall, ensuring you are not left out of pocket after a total loss.
Return to Invoice vs Finance GAP
Return to invoice (RTI) GAP pays the difference between the car insurer's market value settlement and the original invoice price of the vehicle - what you originally paid. Finance GAP covers the difference between the insurer's payout and the outstanding finance balance remaining on a PCP or HP agreement. RTI is more comprehensive if the outstanding finance is less than the invoice price; finance GAP is more targeted at clearing the debt. Some policies offer both.
When GAP Insurance Is Most Valuable
GAP insurance provides the greatest financial benefit in the first three years of ownership when depreciation is steepest. A new car can lose 15-25% of its value in the first year. If a car costing £25,000 is written off after twelve months and the insurer pays the current market value of £18,000, RTI GAP covers the £7,000 shortfall. By year four or five, depreciation curves flatten and the gap between market value and invoice price is smaller.
Where to Buy GAP Insurance
Car dealers sell GAP insurance at the point of vehicle purchase, often at significantly higher premiums than independent GAP insurance providers. The FCA regulates GAP insurance sales and requires dealers to give customers a 2-day deferral period before purchasing dealer GAP to encourage comparison shopping. Purchasing GAP from an independent provider within the first year of ownership typically costs a fraction of the dealer price for equivalent cover.
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Disclaimer
This guide is for general information only and does not constitute financial or insurance advice. Kaeltripton.com is not regulated by the FCA. Always read policy documents in full before purchasing cover.
Frequently Asked Questions
Can I buy GAP insurance after purchasing the vehicle?
Yes. Most independent GAP insurance providers allow you to purchase cover within a specified period after buying the vehicle - typically within 180 days of purchase. After this window closes, some providers still offer GAP cover but may not be able to insure back to the original invoice price if the vehicle has already depreciated significantly. Purchasing as early as possible after buying the vehicle provides the broadest cover.
Does GAP insurance pay out if the theft is my fault?
GAP insurance pays the shortfall between the main insurer's payout and the invoice price or finance balance. If the main insurer pays out for the theft, GAP pays the shortfall regardless of the circumstances of the theft, subject to the standard policy conditions. If the main insurer declines the theft claim - for example, because the keys were left in the ignition - GAP will also decline, as there is no base payment to top up.
