Following consultation with the Financial Conduct Authority (FCA), major providers of Guaranteed Asset Protection (GAP) Insurance have agreed to pause their sales of this product. These providers currently account for 80% of the GAP Insurance market.
What is GAP Insurance?
GAP Insurance provides cover for any financial shortfalls that occur should a vehicle be written off or stolen.
A shortfall can occur if a Motor Insurance payout does not return the original purchase value of the vehicle, or if the vehicle owner still has outstanding finance to repay.
Why have GAP Insurance sales been paused?
The FCA has requested that new GAP Insurance policies are not sold because it wants providers to improve their value to customers.
Providers previously liaised with the FCA to demonstrate that their policies were providing enough value. However, the FCA wasn’t entirely satisfied and has asked insurers to work on improving their offerings to customers. This follows the introduction of new rules, which have strengthened how insurance firms assess whether their products are providing fair value.
GAP Insurance providers are now proposing different distribution channels and are working closely with the FCA to provide a useful service with fair value for customers.
What will happen with my existing GAP Insurance policy?
If you already have a GAP Insurance policy, you don’t need to worry. Your policy will continue to be valid until it reaches its end date.
If you were planning to take out a new GAP Insurance policy, we will not currently be able to help you find cover. That is because a significant proportion of the insurance market has already stopped their sales.
The FCA is now engaging with the remainder of the market to improve value, so it is possible that more providers will temporarily withdraw their products going forward.
If you’d like to chat to our friendly team about other Motor Insurance options, you can get in touch by calling 0800 917 2274.
