Payouts for GAP (Guaranteed Asset Protection) car insurance, which covers the financial gap between a vehicle’s market value and the amount still owing on a loan or lease, have almost tripled between 2021 and 2024.
In 2021, the average GAP payout was £1,587. By 2024, it had rocketed to £5,558 – a sum owners might otherwise have to pay themselves if they weren’t insured.
The reasons for increasing GAP insurance payouts can be traced back to the pandemic, says car warranty provider MotorEasy. These include rising new car prices, spare parts shortages leading to insurance write-offs, and a surge in vehicle theft.
An unusual period of appreciating used car values during the pandemic has firmly turned around, too. Second-hand prices have declined rapidly, particularly for electric vehicles.
Electric car values plummet
New EVs can lose 50-60 percent of their value in just two years, says MotorEasy. Meanwhile, the introduction of more advanced new models has further increased the gap between purchase price and current market value. MotorEasy has seen GAP payouts exceed £20,000 for high-spec EVs.
Meanwhile, a rise in the theft of high-end vehicles has also led to some hefty GAP insurance payouts. More than four in 10 of MotorEasy’s GAP claims over £15,000 were for stolen Range Rovers.
“Our latest data paints a clear picture,” said Duncan McClure Fisher, CEO of MotorEasy parent company Intelligent Motoring. “The financial risks associated with car ownership are escalating.”
He also said that increasingly complex modern cars, and the more costly parts needed for repair, are leading car insurers to write off vehicles more readily. This can mean that owners face a larger financial shortfall if their relatively new car is deemed a ‘total loss’.
Fisher added: “The combination of so many influential factors has created a ‘perfect storm’ where GAP insurance is no longer just a nice-to-have, but an increasingly vital financial safeguard.”
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[…] insurance payouts triple in 3 years £5,558: Average GAP insurance payout in 2024. It was just £1,587 in 2021. MotorEasy blames rising new car prices, spare parts shortages leading to more insurance […]