Glossary
GAP insurance
Cover for the gap between what your car insurance pays out if the car is written off and what you still owe on the loan.
By Leverage Finance · Updated 17 July 2026
Cars depreciate faster than amortising loans pay down in the early years, so it's possible to owe more than the car is worth. If the car is written off in that window, your insurer pays market value, and the loan balance above that is still yours to repay. GAP (Guaranteed Asset Protection) insurance covers that shortfall.
Whether it's worth having depends on how big the gap actually is: a large loan on a fast-depreciating car has a real gap; a modest loan on a well-held car may have none. If GAP was financed into your current loan, check what you're paying for it over the full term, the premium plus the interest on the premium, before deciding whether it earns its place.
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