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What is gap insurance?

Generally speaking, GAP insurance will cover any potential difference between your insurer payout in case of damage to your vehicle, and your vehicle actual value. For example, let's say your car is worth £10,000 at the time it is involved in an accident, your car is irreparable and your insurer gives you money to buy a new one. In most cases, your insurer will give you less than what the car is "worth" or less than what it would cost to buy a new one. Let's say that in this example, your insurance settlement is £8,000: your GAP insurance cover will therefore kick in and pay the difference £10,000 - £8,000=£2,000.

There are various types of GAP insurance, mainly because the "value" of the vehicle can be determined in different ways:
  • RTV ("Return To Value") GAP will pay the shortfall between you car's value today and your insurer's settlement
  • RTI ("Return to Invoice") GAP will pay the shortfall between your car's invoice price and your insurer's settlement
  • VRI ("Vehicle Replacement") GAP will pay the shortfall between what it will cost to buy a brand new equivalent car and your insurer's settlement