What businesses need to know about buying GAP insurance

When your business invests in vehicles – whether for deliveries, client visits or day-to-day operations – protecting those assets is essential.

While standard motor insurance covers the basic risks, it may not always protect you from the full financial impact if a vehicle is written off. That’s where GAP insurance comes in, offering an extra layer of financial protection for your business.

What is GAP insurance?

GAP insurance (Guaranteed Asset Protection) is designed to protect businesses from a financial shortfall if a vehicle is written off or stolen. When this happens, your motor insurer will only pay out the vehicle’s current market value, which could be significantly less than the original purchase price or the outstanding finance amount.

GAP insurance can then cover the difference between what your motor insurer pays and either the amount you originally paid for the vehicle, or the remaining finance owed – whichever is greater.

Whether your business buys, leases or finances vehicles, GAP insurance can help ensure you are not left out of pocket if a vehicle is declared a total loss following fire, theft, accident or accidental damage.

Learn more about how Yutree can help your business

Get in touch

Why are there new restrictions on GAP insurance?

The Financial Conduct Authority (FCA) has recently taken action against many firms selling GAP insurance, after raising serious concerns about the value GAP insurance provides to customers when it is sold as an add-on by car dealerships and finance providers.

The FCA found that in many cases, customers were paying significant premiums for GAP insurance, but only a very small proportion of those premiums were actually paid out in claims. In some instances, over 70% of the premium was being taken in commission by the firms selling the cover, leaving little value for the customer.

As a result, the FCA has asked a large number of firms, representing around 80% of the GAP insurance market, to pause sales while they redesign their products to provide better value. Importantly, the FCA has acknowledged that GAP insurance sold via insurance brokers – rather than car dealers – does not fall into the same “add-on” category and is less likely to suffer from these poor practices.

This means businesses looking for fair value GAP insurance can still purchase it from trusted brokers like Yutree, where products are designed specifically to meet the needs of commercial clients, with fair pricing and a focus on delivering real protection.

Why businesses should buy GAP insurance from Yutree

At Yutree, we offer a specialist GAP insurance product designed for business clients who want to protect their vehicles and their balance sheet. Unlike some products sold through car dealerships, our GAP insurance is tailored to provide real value, not excessive commission fees.

 

Here’s how GAP insurance from Yutree can support your business:

• It helps cover the financial shortfall if your vehicle is written off following fire, theft, accident or accidental damage, so you’re not left with unexpected costs.
• It’s available for a wide range of business vehicles, including cars, vans and trucks.
• GAP cover can apply whether you’re buying a new or used vehicle, whether you purchased it from a dealer or privately, and whether you financed, leased, or bought the vehicle outright.
• You can even purchase cover for vehicles you acquired some time ago if you didn’t take out GAP insurance at the time of purchase.
• We offer GAP cover for fleets, which is ideal for businesses running three or more vehicles. Our fleet GAP insurance provides protection for all eligible vehicles, with flexible cover that allows vehicles to be added or removed as your fleet evolves.

For businesses operating multiple vehicles, GAP insurance is just as important. Yutree’s Fleet GAP insurance offers:

• Comprehensive protection for fleets of 3 or more vehicles, with cover for cars, vans and trucks up to 44 tonnes gross vehicle weight (GVW).
• A temporary replacement vehicle for up to 42 days while your total loss claim is being processed, helping to keep your business moving.
• Flexible annual cover that allows for vehicles to be added or removed throughout the year, with pro-rata premiums applied.
• Protection for vehicles whether they are leased, financed or owned outright.
• Flexible policy options, including short-term cover if required.

In the event of a total loss, the policy will either:

• Clear any outstanding balance owed to the finance or lease provider if your motor insurer’s settlement falls short, or
• Top up the motor insurer’s total loss payout by an additional 25% (up to policy limits), whichever is greater.
• This flexibility ensures your business is never left exposed to unexpected costs that could disrupt your cash flow or operations.

Whether you own a single vehicle or manage a large fleet, the risk of a total loss is real – and could leave your business financially exposed. With the FCA tightening rules on how GAP insurance is sold, buying through an experienced insurance broker like Yutree ensures you get a product designed to provide genuine value and protection for your business, rather than excessive commissions for the seller.

At Yutree, we provide industry leading solutions for businesses – from the smallest to the largest firms.

Get in touch today to learn more about how Yutree can help your business:

Get in touch