GAP Insurance Claim Limits and Exclusions Explained

A claim limit is the maximum amount your GAP insurer will pay on top of your motor insurer's total-loss settlement. It is not the value of your car — it is the ceiling on the shortfall the policy will bridge. Direct Gap's Vehicle Replacement wording states it plainly: “The maximum amount We will pay is restricted to the claim limit shown in the Schedule.”

Providers set limits in different ways. Some tie the limit to your car automatically: gapinsurance.co.uk states that the claim limit on its Invoice, Replacement and Contract Hire policies is set at the original invoice price (or P11D value for contract hire), defaulting to £75,000 where the vehicle is worth more than that. ALA goes further, saying its claim limits “will cover the full cost of your vehicle”, with limits only potentially applying to vehicles worth over £50,000 depending on policy length. Others sell defined tiers — top-up products in particular: gapinsurance.co.uk's Top-Up GAP carries a default £10,000 claim limit.

Why does this matter? Because depreciation gaps on expensive or fast-depreciating cars can be enormous. If your £45,000 car is written off in year three and the market-value settlement is £24,000, a £10,000 claim limit leaves you £11,000 short of the invoice price even with GAP in place. Matching the limit to your car's realistic depreciation is the single most important check before buying.

The table below summarises claim-limit structures, vehicle value caps and excess contributions as stated in each provider's own policy documents and published criteria at the time of writing. Sources: Direct Gap Vehicle Replacement policy terms (DG_GAP_VRI_PTC_2603_1); MotorEasy RTI/RTV IPID (AmTrust Europe, June 2024); ALA's published eligibility and claim-limit guidance; gapinsurance.co.uk's claim-limits page; Click4Gap's published GAP guide.

Exclusions cluster into recognisable groups across providers. The list below is drawn primarily from Direct Gap's Vehicle Replacement policy terms and MotorEasy's RTI/RTV IPID — two full wordings we reviewed line by line — and the same themes appear across the market.

The second family of exclusions concerns what counts as your car's “price” in the first place. GAP insurers do not simply refund whatever appears on your finance agreement.

Negative equity is the clearest example. If you rolled £2,000 of shortfall from your last car into the new finance agreement, that £2,000 is not part of the new car's purchase price — and Direct Gap's wording explicitly excludes “Negative Equity, arrears, the cost of fuel, surrenderable road fund licence, insurance premiums and warranty costs” from any settlement. Its definition of Outstanding Finance Balance likewise strips out arrears, rebates, warranties and other insurance products before the GAP calculation is made.

The invoice price itself is trimmed too. Direct Gap defines Purchase Price as the invoiced price including factory-fitted accessories and dealer-fitted options up to £1,500 and paintwork protection up to £250 — but excluding “all deposit allowances, discounts, rebates, concessions, cashbacks, incentives and contributions”, plus registration fees, road fund licence, number plates, warranties, insurance and fuel. MotorEasy's IPID similarly excludes deposits, discounts, rebates, cashback and incentives, along with on-the-road costs such as registration fees.

VAT has its own rule: Direct Gap excludes “qualifying VAT if You are VAT registered” — relevant to business buyers who reclaim VAT on the vehicle. Finally, watch the excess clauses: Direct Gap covers your motor excess only up to £1,000, excludes any excess recoverable from a third party, and will mirror any deduction your motor insurer makes for contributory negligence or vehicle condition by reducing the GAP payout by the same amount.

Eligibility rules decide whether cover is valid at all, and they are checked at claim time — not just at purchase. Three rules dominate: how old the car is when cover starts, how many miles it has covered, and how long after buying the car you can still take out GAP. The purchase window matters most for online buyers, since almost nobody buys GAP on the day they collect the car any more.

Here is how the five providers we reviewed compare, according to their own published criteria and wordings.

Most GAP policies include a contribution towards the excess your motor insurer deducts from the total-loss settlement — but the caps differ meaningfully. MotorEasy's IPID covers “your motor insurance policy excess up to £500”; Direct Gap's wording covers “up to a maximum of £1,000 motor insurance excess”. Both exclude excess amounts you can recover from a third party. On a £750 excess, that difference alone is £250 at claim time.

Deferred periods are the other timing quirk to understand. Many comprehensive motor policies replace a brand-new car like-for-like if it is written off in the first 12 months — and GAP wordings defer to that: both Direct Gap and MotorEasy exclude claims where your motor insurer offers a replacement vehicle as settlement. Rather than sell you overlapping cover, Direct Gap offers deferred GAP policies on which the start date can be delayed by up to a year, explicitly warning that “there will be NO protection offered by our policy whatsoever during the deferred period”. Used well, this gets you three years of protection for two years of premium; misunderstood, it means a policy that has not yet started when you try to claim.

Separately, FCA add-on rules give showroom buyers a mandatory pause: MotorEasy's IPID notes that customers must receive prescribed information and be “allowed four days” to consider the product before an add-on GAP sale completes.

Even a valid policy on an eligible car can fail at claim stage if you miss the procedural conditions in the wording. Three are near-universal.

First, notification deadlines. Direct Gap requires you to notify its claims administrator within 120 days of the total loss; MotorEasy's IPID sets a 60-day reporting obligation. ALA's criteria require claims within 120 days of the incident.

Second — and most important — do not accept your motor insurer's settlement offer before speaking to your GAP provider. Direct Gap's wording is emphatic: you must contact the administrator before accepting any offer, and if you accept a low offer the insurer reserves the right to recalculate your GAP benefit using the Glass's Guide retail value instead of what you actually received. MotorEasy's IPID contains the same obligation. GAP insurers want the chance to challenge a low market-value settlement, because every pound the motor insurer underpays is a pound the GAP insurer would otherwise cover.

Third, evidence and police reporting. Theft and malicious damage claims must be reported to the police — within 24 hours under Direct Gap's wording, with a valid crime reference number — and claims require your motor insurance schedule, the settlement confirmation, the original purchase invoice and, where financed, the finance agreement and early settlement figure.

Every provider is required to publish an IPID — a standardised two-page summary of what is and is not insured — and the full policy terms are normally downloadable before purchase. Ten minutes with these two documents tells you more than any comparison table, including this one.

Work through this checklist against your own circumstances: