Three types of GAP insurance: Vehicle Replacement (VR) - which covers the cost of a new replacement car (only available on new cars); Return to Invoice (RTI) - covers the difference between the insurance payout and the original purchase invoice or the outstanding settlement figure owed to your finance company (whichever is the greater, and up to the claim limit you have chosen); Finance GAP - covers you only for the difference between the insurers payout and the amount you have left to pay on finance.

Dealers commonly charge £200 - £500 - these GAP policies tend to have no excess. Third Party brokers (Car Care Plan, www.cargapinsurance.co.uk, www.click4gap.co.uk, etc) are cheaper, can provide cover for up to 4 years, but some have a £250 excess for example. Sometimes dealers will match the cost of GAP insurance as part of the car purchase deal.

For new cars, some insurers will replace a car if written off with a new one - some brokers can defer the start of the GAP insurance by one year to cater for this.

GAP insurance has been the discussed a few times previously on this forum - some like it, and some view it as a waste of money.

I have had GAP insurance on our new cars since 2001 (six new cars), usually through Car Care Plan (via the Civil Service Motoring Association), and the most I have paid for three years cover on a new car is £ 178. I view it as worthwhile as it provides extra protection, and, relatively cheap (ie if the cost to change of the new car is £ 7000, £178 is 2.54%). Others may disagree.

Before buying,check the basis of claims settlement - as regards excesses (how will these be covered (paid by you or deducted from the settlement), and how the car will be valued in the event of a loss (ie, will they rely on your insurers figures, or will they value the car themselves).

Edited by Auristocrat on 03/02/2012 at 10:52