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20 September 2023

Written by Simon England

|  6 Minute Read

Comparing GAP insurance and comprehensive coverage auto insurance

A row of cars parked at a dealership. The vehicles appear to be the same model but have various styles.

Third party only or third party, fire and theft are the most basic levels of car insurance coverage you can get in the UK. Comprehensive car insurance is the most popular type of policy as it offers much better coverage than the other options. However, it may not be as extensive as you think. GAP insurance is a different type of additional policy, and you must have comprehensive motor insurance to be able to purchase it.

This article explores what is included in comprehensive coverage compared to what you could be entitled to receive from a GAP insurance claim. Then we compare the two and explain why the two different policy types are not interchangeable. We clarify whether comprehensive car insurance includes GAP insurance and why you should consider a GAP insurance policy.

What is comprehensive car insurance?

In the UK, you must have auto insurance to legally drive on public roads. The minimum level of insurance needed is third party only insurance. Comprehensive coverage offers a higher level of protection, including protection for damage to your own and third party vehicle. It is by far the most popular type of cover.

Comprehensive cover typically includes:

  • Damage to your own property (included in collision coverage)
  • Damage to third party property (included in third party )
  • Accidental damage/natural disaster
  • Vandalism (malicious damage)
  • Total loss – most policies cover up to the market value

When you make a car insurance claim, you will be required to pay your insurance excess, and you are entitled up to the market value of your vehicle if it is declared a write-off by the insurance company. Even with comprehensive coverage, most cars depreciate, leaving you with a considerable financial shortfall.

Do you need comprehensive insurance?

You don’t need comprehensive insurance to drive on public roads, but it is the best way to protect your own property. Additional covers, such as GAP insurance, require you to have comprehensive insurance in place.

What is GAP insurance?

GAP, or Guaranteed Asset Protection insurance, helps cover a financial shortfall if your car is written off. Your car insurance company will usually pay the market value of your vehicle at the time of the write-off. However, a 2022 YouGov survey shows 83% could not afford a like-for-like replacement with their comprehensive motor insurance payout. Due to depreciation and outstanding finance payments, a write-off can leave you significantly out of pocket .

The front end of a black matte sports car on a countryside road.

Back to Invoice is the most common type of GAP insurance, which covers the shortfall between your insurance payout and either your car loan balance or invoice price of the vehicle, whichever is higher at the time. Other policies include Vehicle Replacement Plus , Contract Hire Plus and Agreed Value GAP Insurance.

Do you need GAP insurance?

GAP insurance is not a legal requirement in the UK, but many choose to add GAP cover for peace of mind in the event of a write-off. If you have a fast-depreciating car model, an extended repayment plan, or high interest on your finance agreement, GAP insurance might be a good idea

What is the difference between comprehensive insurance and GAP insurance?

Comprehensive car insurance and GAP insurance are not interchangeable; comprehensive car insurance is a prerequisite for GAP insurance. Comprehensive car insurance covers personal and third-party losses such as damages, injuries and theft of personal belongings.

GAP insurance is only effective if you already have a comprehensive car insurance policy. This type of insurance can help cover financial shortfalls after receiving your market value settlement from your comprehensive motor insurer. The table below outlines what each type of insurance covers and that coverage does not cross over.

Based on typical comprehensive car insurance and Back to Invoice GAP insurance policy

Comprehensive car insurance coverage GAP insurance coverage
Damage (personal & third-party)
Personal injuries
Total loss * **
Outstanding car finance (negative equity)
Vehicle depreciation

* Up to the market value of the insured vehicle at the time of the total loss

** The financial shortfall between the market value settlement from your insurer and the amount owing on finance OR the amount you originally paid for the car (whichever is higher)

exceeding the market value settlement from your insurance company

ALA GAP insurance policies also offer some optional benefits, including excess cover, up to £250, as standard (excluding Agreed Value GAP insurance policies), and up to £3,000 deposit protection on Contract Hire GAP. We have separate cover for higher excess amounts, lost or stolen keys and cosmetic repair costs.

Does comprehensive insurance include GAP insurance?

Despite the name, comprehensive coverage can still leave you with a shortfall to cover after a total loss . However, the exception to this is “new for old” or new car replacement coverage from your motor insurer. However, this is only available for brand-new cars, usually lasts only 12 months, and won’t provide finance coverage. GAP insurance can last up to five years and covers your outstanding vehicle finance.

Why should you get GAP insurance?

You do not need GAP insurance ; it’s not a legal requirement and will not be suitable for every vehicle. However, it’s an affordable type of vehicle insurance that can protect you from a potentially significant financial shortfall if your car is written off.

Research shows that many people are still unaware of GAP insurance, don’t understand what it does or think it is worth it. Many believe that GAP insurance is only for brand-new cars and is not available for used cars or vehicles bought through private sellers. This is not the case; several GAP policies now cover used and second-hand cars if they fit eligibility requirements. You can even take out a GAP policy for car leasing.

GAP insurance can protect the car owner from financial shortfalls, including vehicle depreciation, outstanding finance or lease vehicle rental payments in the event of a total loss. Consider GAP insurance if any of the following applies to your circumstance s:

  • You paid for your vehicle using a finance agreement
  • You bought your car at a discount – the cost of replacing it would be greater than what you bought it for
  • You have a contract hire policy or lease agreement
  • You have a fast-depreciating car model
  • You purchased your car sgtrong
    brand-new from a car dealer
  • Your car is ten years old or less
  • You cover a lot of mileage in your car
  • You bought your car outright but will be considerably out of pocket if it’s written off.

The above circumstances mean you could face a potentially significant shortfall if your car were written off or stolen. The benefits of GAP insurance are not limited to only new cars bought on finance. With a GAP insurance policy, you could save thousands.

See how much you could save, build a quote now.

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