If your car is written off in an accident, the pay-out from the insurer will be the market value – which may be less than your outstanding loan. Gap Insurance covers the difference.
For a one-off payment, you’re protected for the term of your finance agreement, up to a maximum of five years. Your policy covers the difference between the amount your motor insurance will pay and the original invoice value of the car, or the amount you actually owe under your finance agreement, whichever is greater. The insurance will pay out up to a maximum of the invoiced value of the car, or the amount you owe on your finance agreement, whichever is the greater, or the maximum benefit of £20,000.