What is GAP insurance?

GAP insurance (Guaranteed Asset Protection) covers the gap between what your motor insurer pays out if your car is written off or stolen, usually based on its market value at the time, and what you actually still owe on finance, or what you originally paid for it.

It exists because cars typically lose value faster than a finance balance reduces in the early years of an agreement. If a car is written off relatively soon after buying it, the insurance payout can genuinely be less than what's still owed, leaving a real shortfall that GAP insurance is designed to cover.