This policy is designed to get you back in the same make and model of vehicle that was stolen or written off. It helps to protect you against the risk that the car you want to replace is now more expensive to buy than it was when you made your original purchase, for example because you managed to get a great discount at the time which is unlikely to be possible to secure again.
Sometimes you manage to do a great deal on a new car and know it would be difficult to secure that level of discount again, so what happens if that vehicle is later written off or stolen? It could end up costing you much more to replace your vehicle on a like for like basis than you originally paid. On top of this, your comprehensive motor insurance policy is only likely to pay you the market value of the vehicle on the day of the claim settlement, not the day you bought it leaving you with a double gap in the event of a total loss. The Vehicle Replacement GAP Insurance policy is designed to InsuretheGap between the amount your comprehensive motor insurer pays in settlement, and the amount it would cost to buy an identical model, of the exact same age and specification as you originally purchased, even if the price has gone up!
Cost of vehicle £25,000
Insurance Pays £15,000
GAP Pays £10,000