Car owners could lose thousands as insurance ‘safety net’ is suspended

At the end of April, car buyers will lose a valuable safety net that could cost them thousands of pounds. That’s when the Financial Conduct Authority (FCA) will stop companies selling GAP (Guaranteed Asset Protection) insurance. This add-on cover is bought by drivers worried that if their motor is written off by an insurer, their insurance settlement won’t buy a like-for-like replacement or fully pay off a finance company. In 2022, 1.85 million GAP policies worth £350 million were sold in the UK. Currently about 30 per cent of vehicle buyers purchase GAP cover and that proportion is forecast to more than double within the next four years. By indefinitely suspending GAP insurance, the FCA will put the kibosh on many drivers’ dreams of replacing a written-off car. People like Hamzah Nadeem. The pharmacist from Telford in Shropshire has just bought a BMW 530d after his previous 435d was involved in a crash. Nadeem told us: “Without having GAP insurance, I would have lost £10,000 because of the shortfall between what the insurer paid and the cost of replacing the car. I would never buy a car without GAP insurance. My policy only cost £296 for four years.” GAP insurance...

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