GAP insurance pay-outs almost triple the 2021 average

Guaranteed Asset Protection (GAP) insurance payouts almost tripled in 2024 when compared to three years ago, according to new data.

MotorEasy, the vehicle ownership and management solution, said the claims data analysis underscores the growing financial risks faced by car owners due to rapid vehicle depreciation, rising new car costs, spare parts shortages leading to insurance write-offs and a surge in vehicle theft.

MotorEasy said many of the causes of rising GAP payouts can be traced back to the impact of COVID-19.

The pandemic brought about a period of unusual appreciation in used car values, but values have been rapidly declining since then, particularly for some electric vehicles (EVs).

While used values have been falling, purchase costs for new, more technically advanced vehicles have risen, further increasing the gap between the purchase price and the current market value and pushing up GAP insurance claims.

MotorEasy has seen payouts exceed £20,000 for high-spec EVs.

The industry shutdown during the pandemic also led to a shortage of spare parts, the impact of which continues today. 

This shortage, coupled with the more complex nature of modern vehicles and the more costly parts required for repair, has prompted insurers to write off vehicles more readily. 

This means owners face a larger financial shortfall if their relatively new car is deemed a total loss.

Damage is not the only cause of a GAP insurance claim – theft can also lead to significant financial loss when a vehicle has depreciated significantly between purchase and theft.

Just over two fifths (41%) for MotorEasy GAP claims over £15,000 were for stolen Range Rovers, where rapid depreciation has exacerbated the financial loss for owners.