Gap insurance coverage sits alongside your main car insurance to cover any shortfall in your car insurance payout caused by depreciation.
Gap insurance essentially insures the difference between the payout you would receive based on the current market value of your car and a set, pre-agreed value placed on your car. This pre-agreed value determines the type of gap insurance policy you buy, either Vehicle Replacement Insurance, Return To Invoice insurance or Return To Value insurance.
You can find the best, cheap gap insurance for cars by choosing the right type of policy for your needs, and by shopping around to compare quotes and cover. The amount you can claim on gap insurance depends on two variables: the amount you receive from your main car insurance payout, and the type of gap insurance policy you hold.
Here's a breakdown of the different types of gap insurance cover:
Vehicle Replacement Gap Insurance (VRI)
This type of gap insurance covers your car for the difference between your main car insurance payout, and the amount it would cost to buy an exact replacement at the time of claiming.
Return To Invoice Gap Insurance (RTI)
Return To Invoice gap insurance covers you for the difference between your main car insurance payout and the price you paid when you bought your car - or the invoice price. This usually means you have to take out a return to invoice policy immediately (within 6 months) upon purchasing your car.
Return To Value Gap Insurance (RTV)
RTV insurance covers you up the value of your car when you took out the insurance, so will only be available to you if you missed the window for Return To Invoice insurance. As your car is likely to be worth significantly less by the time you take out RTV insurance, the amounts claimed tend to be smaller.
How does gap insurance work?
For example - you buy your car for £10,000.
If you take out a gap insurance policy in addition to your main car insurance plan and write off your car later on, you can claim on both policies. If you only receive £4,000 from your main insurer (its value at the time of the accident), you could claim:
- £6,000+ (i.e. up to your policy limit) on vehicle replacement insurance
- £6,000 on your return to invoice insurance
If you took out a RTV gap insurance policy one year after purchasing the car, when it was worth £7,000, you could claim:
- £3,000 on your return to value insurance
How to get the best gap car insurance quote
By choosing the right type of gap policy, considering all different aspects of gap insurance and comparing the cheapest gap insurance quotes, you can cut your gap insurance cost and get the best cover for less.
Most gap insurance policies cap their maximum claim at somewhere between £5,000 and £25,000 depending on the level of cover you've taken out. If your car cost more originally and will depreciate quickly you might need to look at specialist policies and providers to protect against payouts leaving a shortfall greater than £25,000.
You should also consider the length of time each gap insurance policy will cover you for, with longer policies useful to cars that hold their value well. Gap insurance policies usually run for between 3 and 5 years, and tend to charge their full premium up front. However, some providers let you transfer your policy to a new car if you sell your existing vehicle early, which could be useful if you like to upgrade regularly.
Finally, you should compare the financial product protection included in a policy which, if included, could pay up to a certain amount towards your main car insurance excess and/or a warranty purchased with the car. You can then use our Gap insurance comparison table to compare insurance from the best gap insurance providers side by side and sort policies by your personal needs, to make sure you get the right cover at the best possible price.