8:05 am, March 24, 2025
New and used car prices have seen a significant surge over the past decade. In the last five years alone, the average recommended retail price (RRP) for new cars increased by 43%, from £27,305 in 2018 to £39,038 in 2023, reports Auto Trader.
Two years later, that figure could be as high as £43,000. Meanwhile, the average price of used cars has gone up 70% between January 2015 and January 2025, from £9,863 to £16,774, according to the Auto Trader Retail Price Index.
Despite these rising purchase prices, vehicles continue to depreciate once they leave the showroom. Car buyers are purchasing vehicles at higher prices and then losing value on those vehicles due to depreciation. On average, a new car can lose between 15-35% of its value in the first year, and over three years this can accumulate to between 40-60% of the vehicle’s original purchase price, according to Motorway.co.uk. Used cars may depreciate more slowly, depending on average annual mileage and other factors, but drivers’ equity in their vehicles continues to shrink year-on-year nonetheless.
The depreciation rate, combined with the elevated initial costs, means the financial gap between a car’s purchase price and its market value can be substantial. This can result in a significant loss for drivers in the event of theft or total loss. That is where Guaranteed Asset Protection (GAP) insurance helps, addressing the disparity by covering the difference between the amount the motor insurer pays out and the original purchase price or outstanding finance.
Given the current market, GAP insurance could be a valuable add-on product for car owners seeking to protect their investments, potentially saving them hundreds, thousands or even tens of thousands of pounds, depending on their vehicle make and model.
Restarting GAP sales
However, in February 2024, the Financial Conduct Authority (FCA) announced a pause in GAP insurance sales following a review into fair value, giving insurers time to make appropriate changes. Three months later, Car Care Plan Insurance was among the first vehicle aftercare providers to receive the go-ahead to recommence GAP sales, which resumed in July.
Announcing their decision, the FCA said: ‘Customers purchasing GAP insurance can expect to receive better value cover, which is suited to their needs, and receive better outcomes.’
In line with the Consumer Duty regulations and guidance, Car Care Plan GAP insurance is put through a rigorous internal fair value assessment process to ensure the benefit to customers. In addition to covering the difference between purchase price and market value, the product also offers a motor insurance excess contribution, a guaranteed minimum claims payment of the policy value, and an expert claims negotiation service so customers receive a fair vehicle valuation from their motor insurer. On average, Car Care Plan paid out over £6,500 per GAP claim based on 2024 figures*.
Top rated GAP insurance
That is why Car Care Plan GAP insurance receives the highest, five-star rating from Defaqto, meaning ‘an excellent product with a comprehensive range of features and benefits’.
Car Care Plan GAP insurance is available for vehicles up to 10 years of age and £230,000 in purchase price value. That is protected by a dependable, finically robust provider, with Car Care Plan Insurance underwriting all products and holding an ‘A-‘ (Excellent) financial strength rating from AM Best.
Car Care Plan has a reputation for high quality, dependable aftercare solutions, working with independent retailers through to the industry’s most recognisable brands. They work with over 30 major manufacturers and more than 2,000 vehicle retailers across a hundred countries – registering over 1.5 million motoring peace-of-mind products a year. Through their asset protection products, Car Care Plan pays out millions annually to customers who have suffered a vehicle write off*.
Due to their size and reputation, Car Care Plan can offer multiple distribution models to their manufacturer and retailer partners, including:
- In-dealer model: allowing dealers to take ownership of the sales process, while Car Care Plan provides a wealth of support materials, from point of sale through to oversight and management information reporting suites. This includes a branded video introduction to GAP to ensure a consistent and compliant message for every customer.
- Distance selling model: leveraging Car Care Plan’s vast capability and experience of direct-to-consumer sales, they can take full ownership of product sales on the retailers’ behalf, allowing them to benefit from additional revenue streams while reducing overall responsibility and resource outlay.
End-to-End Product Management
Car Care Plan manages the full policy lifecycle, so their manufacturer and retailer partners can focus on their core business. That includes initial product development to ensure customers receive real value and utility no matter the make and model of their vehicle, through to point-of-sale, fulfilment to claims handling and renewals.
Car Care Plan is the one-stop shop for end-to-end aftercare product provision. Their unique combination of high-quality, tailored vehicle aftercare solutions, comprehensive in-house delivery and support services, financial stability, and industry-leading innovation makes them the trusted partner of choice for manufacturers and dealers worldwide.
To learn more about Car Care Plan’s award-winning products and services, visit carcareplan.com.
*source: Car Care Plan internal reports 2024
