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What is GAP insurance and should you buy it?

We explain the peace of mind GAP insurance can provide and where to get the best value cover

Words ByClaire Evans

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There is a range of GAP insurance products to suit different types of car owners’ requirements, but the most widely offered products fall into five main categories:

1. Finance GAP insurance

This is one of the most basic types of GAP cover, and it helps you pay off any outstanding finance should your car be written off. It’s worth noting that if you go for a more comprehensive policy, it’s likely to include finance cover.

2. Return to invoice GAP insurance

One of the most popular types of GAP cover available, return to invoice pays out the shortfall between the price you paid for your new car and the amount you receive from your main car insurance policy should your car be declared a total loss.

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3. Vehicle replacement GAP insurance

Rather than only bumping up your funds to the amount you paid for your new car, vehicle replacement cover provides enough money to buy a brand new replacement of the same model in exactly the same specification – this is useful if your car is more than a year old when it’s written off or stolen because car makers increase prices annually. It’s the priciest type of cover, though.

4. Return to value GAP insurance

Similar to return to invoice cover, but instead of topping your funds up to the price you paid for the car, it tops them up to the amount the car was worth when you bought it, with the value based on a valuation of the car that is done alongside the quote for cover. It’s best suited to expensive second-hand vehicles.

5. Lease GAP insurance

This type of cover helps someone who’s leased their car to pay the rest of the contract and any early settlement fees if their car is written off or stolen.

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