Little-known car insurance could save you £5,000 if your car is written off in accident – everything you need to know
Various factors have driven up the cash value of these insurance claims
ALL COVERED Little-known car insurance could save you £5,000 if your car is written off in accident – everything you need to know
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A HIDDEN car insurance trick could save you £5,000 if your vehicle is written off.
Motorists claiming on this insurance stand to gain big - as average payouts have tripled in the past four years.
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GAP insurance payouts have nearly tripled in four years
Credit: Alamy
The average payout for Guaranteed Asset Protection - or GAP insurance - has soared from around £1,600 in 2021 to nearly £5,000 this year.
This little-known insurance hack is rarely used - with a Financial Conduct Authority probe revealing that the average driver with GAP insurance makes a claim just once every 300 years.
This product is mainly used to cover a potential shortfall between a car's value and the amount owed on finance if the vehicle is written off or stolen.
Drivers who need to make a claim are likely to receive larger payouts, as those who've financed their cars currently face several financial risks.
GAP insurance is used not only by those with financed cars but also by owners who bought cars outright—they can claim if the insurer's payout is less than what they paid for the car.
Several factors have contributed to the soaring cash value of GAP claims.
These include the fast depreciation of certain vehicles - especially EVs - and a rise in insurance write-offs caused by soaring repair costs and parts shortages.
Rising motor thefts, targeting models like Range Rovers, have also driven up the cash value of GAP claims.
Experts say GAP insurance has shifted from a 'nice-to-have' policy to a 'vital financial safeguard' for today's car buyers.
The increase in the value of payouts "underscores the growing financial risk faced by car owners" in 2025, according to MotorEasy, a leading car ownership platform.
Ford is forced to immediately shut down factories and halt car production as CEO admits 'day to day' struggle for brand
However, this type of insurance has been controversial in the past, as it's often sold by dealers alongside cars - sometimes with limited explanation or inflated prices.
It's usually cheaper to buy GAP insurance through brokers.
The increase in the value of payouts "underscores the growing financial risk faced by car owners" in 2025, according to MotorEasy, the leading car ownership platform.
MotorEasy says the rise in average claim amounts is linked to the lasting effects of Covid-19.
However, since so few motorists were using GAP policies, the Financial Conduct Authority launched an investigation in 2023 over concerns about their value.
This led to many policies being withdrawn, with about 80 percent of products pulled from the market.
Experts now advise car buyers to compare policies carefully and consider brokers rather than accepting dealer offers.
Meanwhile, insurance experts have shared eight tips to help drivers slash the cost of covering their cars.
Tom Banks, a coverage expert for Go.Compare, told SunMotors that one effective way is to choose a higher excess.
This means you agree to pay more out of pocket if you make a claim, which lowers the amount the insurer has to cover.
Tom explained: "You want to make sure that you will be able to afford to pay it should you need to make a claim.
"But it's worth bearing in mind that choosing a higher voluntary excess will usually bring your car insurance premium down."
What is car insurance?
Consumer reporter Sam Walker talks you through what car insurance is and what it covers you for...
Car insurance pays out if your vehicle is stolen, damaged, catches on fire or is involved in an accident.
As a minimum, it protects you against any damage you case to other road users, the public or their property - these are called third parties.
You only need to claim on your car insurance when an accident is your fault.
If another motorist is to blame, their insurance should pay out instead.
Car insurance, unlike home insurance, is a legal requirement and if you don't have it you can be fined up to £1,000.
You can also have your vehicle seized and destroyed.
However, you don't need to insure your car if it is classed as "off-road", or holds a statutory off road notification (SORN).
The vehicle has to be kept on private land and not a public highway though.
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