Mind the Gap

When you bought your car through financing, you filled in loads of forms and chose the spec and colour. You were then probably asked if you wanted GAP insurance and chose not to go for it. Maybe it wasn’t explained to you, maybe you didn’t understand it or maybe you thought you didn’t need it. But it’s something you certainly should know about. 

April 2019 saw around 76,000 new car purchases all paid for through finance.  91% of new car buyers chose financing. 

“With so many of us opting to purchase cars on finance plans, it is vital that insurers make consumers aware of the possible shortfall between the loan value and the current used value of the car, and that they provide the option to cover their vehicle at new or market values.”

As you know, brand new cars lose their value very quickly. On average, half the original price will be lost over the course of three years. Leaving a difference between the price you paid for your car, and its market value one, two or three years later. If you’re not intending to sell your car, then this doesn’t really matter, unless your car is stolen, or your vehicle written off. In this case, depending if your motor policy states you’ll get “Agreed Value” (which is how Condor Private Clients insure your motor so you are guaranteed and confident with the value of your car) or “Market Value” (which is how  98% of the motor insurance market insure your motor).

 There may be a big difference between the amount your insurer will give you, and the price you originally paid for your car or the finance you owe on the car?  And that’s why you may have been  offered GAP insurance by your finance company. 

What’s GAP insurance? 

GAP insurance (Guaranteed Asset Protection Insurance) will cover the difference between the market value of your car – the amount your insurer will give you – and the price you paid for your car. It gives you the peace of mind that, if the worst should happen to your car, its purchase value is covered irrespective of the amount of depreciation that has occurred. 

You’ll receive a GAP insurance pay out if your car is declared a total write-off or is unrecoverable. “Unrecoverable” is used to describe a vehicle that cannot be recovered or has been stolen.

There are three types of GAP insurance: 

  1. Finance GAP insurance: if you’ve taken out finance to buy your car, this will cover the amount you still owe the finance company in the event of theft or your car being written off. 
  1. Return-to-invoice GAP insurance: this covers the difference between your car insurance pay-out and the exact price you paid for your car. It can be used for both new and second-hand cars.
  1. Vehicle Replacement GAP insurance: this covers the new price of the exact model and specification of your car, even if the price has gone up in the meantime.  

Be aware that you can only usually get GAP insurance if your main car insurance policy is fully comprehensive; the highest level of protection you can get. 

The Clarke family that didn’t mind the ‘GAP’ 

Team Clarke are a family of 5 with 3 children having all just started school. After a number of breakdowns the decision was made to finally get a new car.

A Volkswagen Tiguan bought brand-new via financing. They called up their current motor insurer and made a mid-term amendment on their insurance policy, so they were now covered, or so they thought. 

They were offered GAP insurance through the Volkswagen dealership garage but admits that they didn’t understand what it really covered them for and what was the point of paying for extra insurance?!

Almost 3 months later at 4am their house was broken into while they were asleep. The Clarkes woke to discover their new car had been stolen off their drive. 

After the initial shock they started the process of calling the police and phoning their insurer. 

What did they discover; 

  1. They only had market value on their insurance policy, meaning they had instantly lost £1000’s on the original purchase price paid
  2. The amount the insurer was willing to pay out wouldn’t cover the full amount owed on financing
  3. They didn’t have GAP insurance to cover the shortfall
  4. Now they needed to find money not only to cover the short fall on the financing but also a deposit for a new car
  5. They have been left seriously out of pocket

Team Clarke would have been in a much stronger financial position had they understood how GAP insurance could benefit them or to have had ‘Agreed Value’ on their insurance policy. 


At Condor Private Clients we can insure all your vehicles under one policy: either stand-alone or alongside your household insurance. 

We’ll find the best solution to suit your individual needs, covering you whether you own one car, multiple cars, high performance or classic cars or a multimillion-pound private fleet.

You’ll also benefit from: 

  • Being paid the full agreed value of your car if the worst happens:  Before you agree your insurance policy, we will work with you to determine the value of your vehicle(s). Our insurers offer ‘Agreed Value’ on your motor policy so you know that if your car is declared a total write-off or is unrecoverable you will be paid the full Agreed Value on your car and won’t be penalised for depreciation.
  • Being insured when you drive other cars: You will be fully covered to drive any vehicles your do not own (subject to insurer policy chosen) 
  • New for old replacement: If you have a covered loss to a vehicle that you have owned for less than 36 months, our insurer will replace it with a brand-new vehicle of the same make and model
  • European Motor Breakdown Cover: If you break down in the UK or in Europe a team will be available to assist you, wherever you are 
  • Comprehensive cover for conventional classics to modern day classics whether you own a single collector car or a multi-million priced collection.

If you’d like to learn more about our motor insurance, please contact us today on paula@condorpc.com.  

Posted 7th July 2020

Condor Insurance