Guaranteed asset protection insurance (GAP)
What is guaranteed asset protection insurance?
Guaranteed asset protection insurance (GAP) covers the difference between the amount you paid for your car and how much you would get from your insurance provider if it was written off or stolen. It’s often sold at car dealerships when you buy your vehicle and can be useful if you have taken out a personal loan to cover the cost. This is because while the insurer will pay out the value it's worth at the time, you will still have to back the full amount that you borrowed. But most insurance policies offer a new car replacement for models less than two years old, so GAP is a waste of money in this instance. Similarly, when buying a used car, it’s also pointless, because a used car won't fall in value at the same rate as a new car. So, think twice before you buy.