GAP insurance explained

GAP insurance explained Header Image

Our team are here to help

92% of our customers get a cheaper quote over the phone

92% of our customers get a cheaper quote over the phone


GAP insurance refers to Guaranteed Asset Protection. This is a type of additional cover designed to work alongside your contract hire car insurance. It’s a valuable protection to have in place should your leased vehicle be written off or stolen.

The overall purpose of GAP insurance for leased cars is to cover the ‘gap’ between the actual cash value of the vehicle – the price your provider will pay – and the current outstanding balance on your lease. In essence, GAP insurance protects your lease.

If you haven’t got GAP insurance and you’re unlucky enough to have your car written off or stolen, you could find yourself owing the contract hire company more than your insurance company is willing to pay out.

Leased Car Insurance from Keith Michaels

  • ANY vehicle owned on a leased basis insured – lease rental or lease purchase
  • Cover provided for both businesses and individuals
  • Introductory bonuses, ex company car discounts, mirrored bonus, etc
  • We are a well established UK based company and do NOT operate a call centre
  • Instant cover available
  • Monthly payment options

Leased Car Gap Insurance Explained

Leased car GAP insurance is available in many different forms, depending on the type of lease you have. The two main ones are:

Return to Invoice

If you are financing your car with a Personal Contract Purchase (PCP) deal  – and have the option to buy it once your leasing period comes to an end – your insurer can provide GAP insurance to cover the invoice price.

Should your car be written off or stolen, return to invoice GAP insurance works by paying off the difference between your insurance settlement and the original invoice price you paid, or the outstanding finance on the vehicle. It allows you to get the full purchase price of the car back, and clear any finance if necessary.

Contract Hire/Finance Gap Insurance

If you have taken out a Personal Contract Hire (PCH) deal, your insurer can provide finance GAP insurance. If your car is stolen or written off, this cover will pay the difference between your insurance company’s settlement and your outstanding finance settlement. Essentially it will enable you to walk away with no financial liability to your old vehicle.

Should I get GAP Insurance?

According to statistics, in the UK new cars depreciate by 40% – 60% over the first three years. With approximately 375,000 vehicles stolen each year, and over 230,000 road traffic accidents resulting in a car being written off by the insurer, for many, taking out GAP insurance for leased cars is an important safety measure.

Choosing a Specialist GAP Insurance Provider for Leased Cars

Some insurance providers cannot provide suitable policies to drivers who are not the owner of their vehicle. Specialist, independent brokers such as Keith Michaels offer flexible GAP policies to motorists who have a car under contract hire. These include annually renewable options rather than ones that last typically three years.

Applying for Leased Car Gap Insurance

There are a few things you need to consider before applying for GAP insurance. Firstly, you can only apply if your vehicle has been labelled a complete write-off or unrecoverable. It’s also important that you have fully comprehensive cover on your leased car otherwise your application will be denied. Furthermore, you must be absolutely sure about the type of lease you have. This is because providers will need to know who has ownership of the vehicle at the end of your contractual period.

In some cases GAP insurance is built into a leasing contract – often referred to as ‘lease coverage’ – so you may not need to apply for extra protection. It’s also worth remembering that the ‘gap’ between the car’s worth and what you owe at a time of loss is constantly fluctuating. Therefore you may only need the coverage for a specific period of time rather than your entire lease. Make sure you discuss this with your provider when you apply for GAP insurance.

Leased Car Insurance

Find out more about our unique insurance policies and how we can provide the right coverage for your requirements.