GAP insurance is usually explained using a brand new car driven off a forecourt, which leaves most buyers assuming it is irrelevant to them. Used purchases are the larger market, and the shortfall on one can be just as wide.

Where the gap comes from on a used car

Depreciation does not stop once a car has had one owner. A three year old vehicle still loses value steadily, and if it was bought with a small deposit on a long agreement, the balance can sit above the vehicle’s value for a substantial part of the term.

Add the fact that used cars are often financed over four or five years, and the window where a write-off would leave you owing money is wider than people expect.

What changes compared with a new car

Return to Invoice works from the price you actually paid, so on a used car it is the forecourt price rather than a list price. That tends to make the cover more proportionate and often cheaper.

Finance GAP works the same way regardless of the vehicle’s age, since it is built around the outstanding balance rather than the purchase price.

The practical difference is that used values are less predictable. Mileage, condition and service history move a used valuation far more than they move a new one, which makes the motor insurer’s settlement harder to anticipate.

Eligibility is the thing to check first

Policies set limits on how old a vehicle can be and how long after purchase cover can be arranged.

For our policies the vehicle needs to be up to ten years old, with you as the registered keeper and the policyholder on the main motor insurance. There is normally a window after purchase within which cover must be taken out, so this is not something to leave for six months and come back to.

Where it is less likely to be worth it

If you bought outright with no finance, the car is older, and you could replace it from the insurance settlement without difficulty, the case is weaker.

GAP earns its place where there is a debt to clear, a deposit worth protecting, or a vehicle you could not easily replace from a market value payout. It is not right for everyone and the honest answer depends on your circumstances.

Checking your own position

Take the price you paid, the outstanding balance, and a realistic view of what your insurer would pay today. The gap between those figures is the whole question.

To talk it through, call us on 0161 388 2550 or email sales@gapinsurancetoday.co.uk.