How much does GAP insurance cost?

Often the most sensible approach is to prepare for the worst, and like most insurance products GAP insurance is designed to do exactly that. Essentially its job is to cover any shortfall, in the event that your car is written-off or stolen, between its value at the time of loss and what you paid for it.

Your regular car insurance will pay out the former figure but there may be a considerable difference between that and what you paid, the amount of any outstanding finance on it or the cost of replacing it with a new vehicle.

What does GAP insurance cost?

It is important to note there are two types of GAP insurance: finance and return to invoice. You need finance if you’ve bought your car on finance, as this will cover the difference between your car insurance payout and the sum owing to the finance company.

Return to invoice GAP insurance is required if you already own the vehicle (although it can also be used if you have bought it on finance), and will pay the difference up to the original purchase price of the vehicle. Some providers also offer vehicle replacement GAP insurance which will pay out to cover the cost of replacing the vehicle even if it is more expensive than when you bought it.

As with any other kind of insurance, the higher the level of cover and the longer the period, the higher the premiums will be. Generally speaking, a return to invoice policy will be cheaper than finance or vehicle replacement policies, and the shorter the period covered the cheaper it will be too.

Another factor to take into account is the actual amount of cover the policy offers. Most insurers will offer a recommended amount of cover, but you should base this decision on the likely level of depreciation of your particular car - you can use the Honest John Used Price Guide to help you calculate this.

As always, taking into account all the various factors will help you choose the right level of cover which is essential to ensure you have enough to make it worthwhile but not too much so you end of paying more than is really necessary. The table below shows how premiums can differ depending on the value of the car and the length of cover required.

These examples are based on a car bought within the last four months, and taking the recommended level of cover on a back to invoice basis. We've made a lot of assumptions. Your circumstances will be different - so make sure you check to see what it will cost you.