Why Dealers Stopped Selling GAP Insurance

GAP insurance was never banned. What happened in 2024 was a regulatory intervention into how it was sold — above all, into the commissions paid to dealerships and brokers for selling it. The FCA's concern was value for money, not the product itself. As Sheldon Mills, the FCA's Executive Director of Consumers and Competition, put it in the regulator's 9 February 2024 press release: “GAP insurance can provide a useful service to customers, but in its current form it does not offer fair value and we want to see improvements.”

Today, the product is widely available from FCA-regulated online specialists such as ALA, Direct Gap, MotorEasy, gapinsurance.co.uk and Click4Gap. What has largely disappeared is the version sold across a dealership desk at the point you sign for the car. If your dealer did not offer GAP — or actively told you they no longer sell it — the sections below explain exactly why.

On 9 February 2024, the FCA announced that multiple insurance firms — together accounting for around 80% of the GAP insurance market — had agreed to pause sales of the product following the regulator's concerns that it was failing to provide fair value to customers.

The firms agreeing to the pause committed to make changes to their products so they delivered better value, in line with the FCA's Consumer Duty rules, before being allowed to resume selling. On 4 March 2024, the FCA confirmed it had written to the remaining firms in the market — a second tranche of engagement — asking them to pause sales too. For a period in spring 2024, it was effectively impossible to buy a new GAP policy in the UK from most providers.

The key dates, all drawn from the FCA's own press releases and subsequent industry research, are summarised below.

The trigger for the intervention was the FCA's 2022 insurance value measures data. According to the regulator's February 2024 press release, that data showed only 6% of the amount customers paid in GAP premiums was being paid out in claims. In other words, for every £100 collected from motorists, roughly £6 came back to policyholders.

This was not a new concern. The FCA noted that its earlier market study into insurance add-ons, published in 2014, had found GAP claims ratios averaging around 10% of premiums between 2008 and 2012 — poor, but the 2022 figure was worse still. The 2014 study led to rules requiring dealers to give customers prescribed information and a deferral period before completing an add-on GAP sale — a requirement you can still see referenced in provider documents today; MotorEasy's IPID, for instance, notes that under FCA rules customers must be “allowed four days” to consider the product's features, benefits, exclusions and price.

By 2024, with the Consumer Duty in force, the FCA had a stronger tool. Products must now demonstrably provide fair value — and a product returning 6p in the pound plainly did not.

So where was the other 94p going? A large part of the answer was distribution cost. The FCA's February 2024 press release stated that some firms were paying out as much as 70% of the value of insurance premiums in commission to parties involved in selling GAP policies — chiefly the motor dealerships and finance brokers offering the product alongside car sales.

That structure explains the price difference motorists had long noticed between showroom GAP and online GAP. When most of the premium funds the seller's commission rather than the insurance risk, the same underlying cover ends up costing several times more through one channel than another. It also explains why the FCA targeted distribution arrangements rather than the product design itself: the cover worked, but the economics of how it was sold did not.

The scale of the market made this a significant consumer issue. The FCA's May 2024 release noted there were over 2.4 million GAP policies in force in 2022.

On 24 May 2024, the FCA announced that several firms had been permitted to recommence GAP sales after demonstrating that their products now provided fair value in line with its rules. Crucially, the regulator said these firms had resumed “with materially lower levels of commission being paid out to those selling GAP”.

Trade press reporting of the FCA's update — including Insurance Times and Insurance Post — identified the first underwriters cleared to return as Fortegra Europe Insurance Company, Motors Insurance Company, AmTrust Europe and Financial & Legal Insurance Company. AmTrust Europe, for example, underwrites GAP policies sold by MotorEasy, per MotorEasy's own IPID.

Sheldon Mills summed up the regulator's position in the May 2024 release: “We took action when our data showed that customers were not getting a fair deal.” The FCA said customers buying GAP after the restart could expect better value cover suited to their needs.

Although GAP sales were allowed to resume from May 2024, most dealers chose not to return to the product. Research by Intelligent Motoring — the automotive services group behind MotorEasy — reported by Motor Trader on 25 March 2025 estimated that around 90% of dealers no longer offer GAP cover for sale, with only about one in ten actively advertising it.

Intelligent Motoring's chief executive, Duncan McClure Fisher, described retailers as hesitant to sell the product even after the regulatory position was settled. With commission levels cut materially, the incentive that once made GAP a showroom staple had largely gone, while the compliance burden of demonstrating fair value remained. Motor Trader's report noted that during the pause some dealers pivoted to alternative add-ons such as cosmetic, tyre or breakdown cover instead.

The wider market has consolidated around direct and online channels. JENOA's October 2025 market analysis put the UK GAP market at roughly £150–£200 million a year — a small corner of the £27 billion UK motor insurance market — with fewer than 2.5 million policies in force, and cited the Intelligent Motoring figure that 90% of dealers no longer sell the product. Notably, the same analysis pointed out that demand had not disappeared: Intelligent Motoring reported claim payouts regularly exceeding £20,000–£30,000, and some customers reportedly delayed purchases until GAP became available again.

The practical consequences of the FCA intervention are mostly positive for consumers, provided you know where to look.

First, online is now the main channel. With roughly nine in ten dealers out of the market on Intelligent Motoring's 2025 figures, specialist online providers are where the vast majority of GAP policies are now bought. That was already the cheaper route before 2024; now it is often the only route.

Second, the product you buy today has been through a fair-value review. Every firm that resumed sales after the pause had to satisfy the FCA that its product provides fair value under the Consumer Duty, and the FCA confirmed that returning firms had cut distributor commissions materially. That does not make every policy identical — claim limits, exclusions and eligibility rules still vary significantly between providers — but the worst value-for-money outliers the FCA identified have been removed from the market.

Buying GAP in the post-intervention market is straightforward. Most online specialists let you buy within a window after taking delivery of the car — ALA, for example, allows Back to Invoice cover to be bought within 180 days of delivery, per its published eligibility criteria — so there is no need to decide anything on the day you collect the vehicle.

Get quotes from two or three providers for the same cover type (return to invoice, vehicle replacement or finance GAP), check the claim limit and the exclusions list in the policy wording, and confirm the provider and underwriter appear on the FCA's Financial Services Register. Because commissions have been cut across the market, price differences between reputable online providers are now smaller than they once were — the bigger differences tend to sit in the policy terms.