Sales of used cars have fluctuated over the past five years, with prices dramatically increasing in 2022. Despite the market stabilising, the price of used cars remains high, enticing drivers to look elsewhere for a budget motor. High used car prices mean that it’s more important than ever to seek financial protection for your depreciating assets – even if you opted for a private sale. If you have recently bought a vehicle from a private seller, or you’re considering your options, GAP (Guaranteed Asset Protection) insurance is available for peace of mind if a total loss occurs.
In this guide, we will explain which GAP products are available for private sales, the restrictions in place, how private sale GAP insurance compares and whether GAP insurance cover is worth it. We will also explore when you can buy a GAP insurance policy, and why you should choose ALA.
Agreed Value is a type of cover that pays the depreciation during the policy term after a total loss
Traditional types of GAP insurance offer numerous benefits but have stricter eligibility requirements
In addition to a comprehensive car insurance policy, there are a couple of general requirements
Cars depreciate the fastest in the first year, but older cars will still lose value over time
To get the most from total loss protection, it’s best to purchase a policy as soon as possible
Buy it from a reputable GAP insurance provider such as ALA insurance
Buying a car from a private seller is a great option for some; you usually have more opportunities to haggle for a better deal, but it can affect the type of GAP insurance available. While your car isn’t brand new or bought from a VAT-registered car dealer, you’re still able to protect your investment in the event of a total loss with Agreed Value GAP insurance.
Agreed Value GAP insurance is a type of Guaranteed Asset Protection available for privately bought vehicles and those who don’t meet the eligibility requirements for return to invoice GAP insurance, lease GAP insurance or vehicle replacement GAP.
Simply explained, Agreed Value GAP insurance aims to cover the depreciation in vehicle value from the time you bought GAP cover to the time of your total loss. Cars can lose up to 80% of their original value over ten years, making GAP insurance a smart decision for protecting against financial loss, even for used, privately bought cars.
After a total loss, the policy pays the difference between the market value settlement paid by your regular car insurance provider and the current market value of your vehicle at the time you purchased a GAP policy. It’s best to acquire your GAP insurance policy as soon as possible, as vehicles can depreciate quickly. With unpredictability in the used car market, it can be helpful to know you’re covered if prices drop in the future.
Agreed Value GAP can also be helpful for a new vehicle bought from a dealership if you’ve run out of time to purchase one of the other GAP insurance policies.
Both policies top up your comprehensive motor insurer’s settlement to cover your financial shortfall after a total loss. However, there are some key differences which you can examine in the table below:
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GAP insurance for private sales |
GAP insurance for dealership-bought cars |
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✅Covers the depreciation over the time you hold a GAP insurance policy |
✅Covers the depreciation from when you bought your car to when it’s written off |
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✅Available for any cars up to 15 years with any mileage, with a current value of between £5,000 and £75,000 |
✅Covers up to the vehicle’s purchase price, replacement cost or the remaining amount on your finance agreement |
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✅Covers any vehicle listed in the Glass’s Guide (not otherwise excluded). |
✅Covers lease agreement shortfalls, including up to £3,000 of deposit protection (Contract Hire GAP insurance). |
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✅Covers cars up to £125,000 in value |
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❌Limited to cars less than 10 years old |
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❌GAP policy must be purchased within 180 days of vehicle possession (365 days with CHG). |
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❌Doesn’t cover the type of negative equity carried over from a previous finance contract |
If you bought a car privately, you wouldn’t have had the option to pay with vehicle finance, whereas this is a common option when shopping at dealers. In fact, up to 90% of new cars are paid for on car finance.
It’s a common misconception that GAP insurance is only worth it for financed cars but it can be equally beneficial for cash sales too.
GAP insurance for cars bought outright covers the loss in value from when you bought the car (BTI), the policy (AVG) or the replacement vehicle cost (VR). The only difference with vehicle finance is that it also covers up to the outstanding finance, if this is higher than the invoice or replacement price at the time. How you use your GAP insurance may vary, too. With financed cars, we’ll pay your finance settlement directly, and you’ll receive any remaining cash. Alternatively, if you don’t have a finance agreement, you will receive a full cash insurance payout.
Ultimately, both options mean that you aren’t left paying for a replacement motor out of your own pocket. Without GAP insurance, you could be part of the 65% who cannot afford a new car using their car insurance settlement alone.
Get a GAP insurance quote today
There are very few restrictions on privately purchased vehicles for GAP insurance. Your vehicle must be comprehensively insured and listed in the Glass’s Guide, a system that accurately values vehicles based on extensive market data. Your car must also be valued between £5,000 and £75,000 to be eligible.
There are also more general restrictions on the type of vehicle you can buy a policy for. For instance, luxury cars such as Lamborghinis do not qualify. Hire and reward vehicles such as taxis, driving tuition vehicles and courier vehicles are also ineligible.
Read about what GAP insurance doesn’t cover here.
While not a legal requirement, GAP insurance is a great way to protect your investment, especially when purchased early, as it can cover a significant amount of vehicle depreciation. Agreed Value GAP insurance policies are also much more flexible because they have no age or mileage restrictions. Also, because you do not have any time limits to buy a policy, you can renew your coverage until your car is 15 years old.
Although not brand new, your new vehicle could still be worth a substantial amount of money, so it is important to protect your finances should it be stolen or written off. Explore the possible shortfall without choosing Agreed Value private sale GAP insurance.
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Market value at the time of policy start date |
Current age (average annual depreciation rate) |
Policy Length (age at the end of the policy) |
Market value at the end of the policy |
Possible financial shortfall |
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£16,600 |
4 years (-8%) |
4 years (8 years) |
£11,892 |
£4,708 |
The calculations above indicate that you can still lose a significant portion of your vehicle’s value, even if you own a second-hand car that’s slightly older. Agreed Value policies are available for up to four years, and without age and mileage limits, you can repurchase GAP cover when your original policy runs out.
Find out if GAP insurance is worth it for you – build a quick quote.
You can acquire GAP insurance at any point for your privately bought vehicle because there are no age or mileage limits and generous timeframe requirements. However, the earlier you buy GAP insurance coverage, the less the value of your car decreases without coverage.
Cars lose a significant amount of value each year, so delaying your cover could cost you. Explore the average annual depreciation rates below:
There are two options for buying GAP insurance: through a dealership and online, through a third-party provider. The option of buying GAP insurance from a dealership is not available for cash sales, but this means you can find the most competitive prices from reputable providers, such as ALA Insurance. You can also select optional extras such as tyre and alloy wheel insurance or keycare.
We have four GAP insurance policy options for privately bought, leased and financed cars, so you can choose the level of cover that suits your needs. Our friendly, UK-based customer service team can answer any questions you may have about your privately bought vehicle and whether you meet the requirements for an Agreed Value GAP policy. With a 4.9-star Trustpilot rating, we pride ourselves on providing excellent customer service and high-quality coverage.
Yes, ALA does offer Agreed Value GAP insurance to cars of any age or mileage. However, as cars age, they depreciate more slowly, so it’s best to get GAP insurance as early as possible for the best protection. If you own a fast-depreciating car model or a very valuable motor, it would still be worth getting GAP insurance, even if it’s over ten years old.
GAP insurance is worthwhile if you’d struggle to fund a replacement car in your current situation. This is surprisingly common; 65% would need to downgrade or pay out of their own pocket. GAP insurance is beneficial for privately purchased cars, dealer-bought cars, and financed or leased cars because different policies cover different types of shortfalls. Explore which GAP policy would be right for you here.
GAP insurance time limits differ from policy to policy. For Back to Invoice Plus (or Return to Invoice Plus), you have 180 days from when you purchased your vehicle. For Vehicle Replacement Plus, it is 90 days, and for Contract Hire Plus and Agreed Value, you have 365 days from when you collected or bought the car, respectively.
You don’t need to provide any documents when you buy GAP insurance, but you will need the following when making an Agreed Value claim:
It’s definitely a good idea to buy GAP insurance for cars, which can still lose a lot of their value over a typical policy duration. However, it may not be worth it for old, low-value cars that are depreciating very slowly.
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