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What’s the best GAP insurance for my used car?

16 November 2023

Written by Simon England

|  5 Minutes

Guaranteed Asset Protection (GAP) insurance is an affordable cover to protect you from car depreciation and owing a significant amount on finance if you write off your car. It’s a common misconception that GAP insurance is only available for a new vehicle. Used, pre-registered and second-hand cars can be eligible for GAP cover too.

Whether your car is pre-registered or second-hand, you may benefit from GAP insurance if your car is written off. Most car owners have vehicle finance, and if you write off the car, you risk owing your car finance company a significant amount whilst being without a car.

The best GAP insurance for pre-registered or nearly new cars

If you have a pre-registered or nearly new car, its value will depreciate by a substantial amount over the course of 3-5 years. While they don’t suffer as sharp a drop as new cars being driven away from the dealership, GAP coverage is worth it for pre-registered vehicles, especially for fast-depreciating models. If you recently bought a pre-registered car, you can choose between Back to Invoice Plus or Vehicle Replacement Plus to protect against this following a total loss.

Back to Invoice insurance covers the shortfall between the comprehensive car insurance payout and the original invoice price of the car or the outstanding car finance, whichever is higher at the time. A standard car insurance payout is usually insufficient to cover the original amount you paid for your car or the outstanding finance on it. Y our GAP insurance policy, therefore, tops up your motor insurer’s market value settlement.

Vehicle Replacement is similar to Back to Invoice Plus; we cover the shortfall between your car insurance settlement and the cost of replacing your original vehicle with another similar pre-registered vehicle. Alternatively, we settle your loan balance with your finance provider if your outstanding finance is higher than the cost of the replacement vehicle.

Agreed Value policies are available for cars that missed the timeframe requirements for the other policies. If you’ve owned your vehicle for over 180 days, you are not eligible for Back to Invoice or vehicle replacement cover.

A man wearing a shirt driving with both hands securely on the wheel

The best GAP insurance for pre-owned or second-hand cars

Many people buy second-hand or older vehicles because they are cost-effective. However, these cars still depreciate, albeit at a slower rate than brand-new cars . GAP insurance can be a good way to protect your finances after a total loss, particularly if you pay for your second-hand car on finance.

Agreed Value GAP policies are available for cars bought from a private seller or if you purchased your vehicle outside the timeframe requirements of the other policies. Agreed Value GAP insurance covers the difference between the market value settlement from your insurance company and your car’s market value when taking out a GAP insurance policy. We base your cover on the Glass’s Guide retail value at your GAP policy start date.

The best GAP insurance for used car leasing

Although pre-registered lease vehicles are less common, some businesses prefer them for reducing business costs. You can take out a Contract Hire GAP policy to cover yourself or your business from a financial shortfall or cash flow issues after a total loss.

Contract Hire GAP insurance pays the difference between the car insurance settlement and the amount owed to the finance company, including any outstanding rental payments. GAP insurance also covers up to £3,000 of your rental deposit, helping you secure a new lease more quickly.

A glossy grey Audi hatchback car driving along a cobbled street.

Which type of GAP insurance is best for cars bought outright?

Vehicle finance, such as PCP or Hire Purchase, is useful for making cars more affordable. However, they can leave you in a difficult situation if you write off your vehicle. Some people pay for their car outright to avoid owing a finance company money.

In this scenario, you may think GAP insurance is unnecessary; however, cars will depreciate whether you buy them using a finance agreement or with cash. GAP insurance helps to cover this by topping up the market value settlement from your insurance provider after a total loss. If the car meets the policy requirements, cars bought outright can be covered by Vehicle Replacement GAP insurance, Back to Invoice Plus or Agreed Value.

Build a GAP insurance quote to find the right policy for you.

What kind of GAP insurance do I need for my used car?

The kind of GAP insurance coverage you need will depend on how you paid for your car, where you bought it, and how long you have owned it.

If you have owned your car for less than 180 days and it’s less than ten years old, you are eligible or Back to Invoice GAP. If you’ve owned your car for less than 90 days, it’s less than seven years old and has less than 80,000 miles you’re eligible for Vehicle Replacement Plus. You can take out either policy regardless of whether you paid on car finance or with cash.

If you bought your car from a private seller or have already owned it for a long time, you may only be eligible for Agreed Value GAP insurance. Opt for Agreed Value if you exceed the timeframe requirements for Vehicle Replacement or Back to Invoice.

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