Do I need motor GAP insurance as a taxi or private hire driver? 

When you use your car for work, your vehicle becomes more than a means of transportation, it’s your livelihood and crucial to the day-to-day running of your business. And, if your good reputation as a taxi or private hire vehicle driver means a lot to you, a reliable vehicle is essential.  

Therefore, just like any other business owner would, you need to insure your livelihood, particularly against incidents that could cause financial issues for you and your business. 

But do taxi or private hire drivers actually need motor GAP insurance and is this type of insurance beneficial? 

In this article, we’ll explore the benefits of motor GAP insurance for taxi drivers and those operating private hire vehicles, and whether this type of policy is worth the extra cost. 

Jump straight to a specific section or read on for the full piece: 

• What is motor GAP insurance? 
• Why has GAP insurance had bad press? 
• Is motor GAP insurance worth it? 
• Where can I find a policy that covers taxi and private hire drivers? 

What is motor GAP insurance? 

Motor GAP insurance (also known as motor guaranteed asset protection insurance), is a type of insurance policy that will cover the financial ‘gap’ between the amount you paid for your vehicle upon purchase and its current value if the vehicle is written off or declared a total loss. 

This type of insurance will also cover the outstanding payments left on a leased vehicle if there is a discrepancy between how much you have left to pay and how much your car is worth.  

The reason many people consider motor GAP insurance beneficial is that cars are depreciating assets, meaning as soon as a new car is driven off the forecourt, it decreases in value.  

If your car is written off, your standard motor insurance policy usually only covers you financially for its current market value (which can be thousands less than what you paid for it). Therefore, without GAP insurance you could find yourself with a considerable financial loss.  

Alternatively, if you are leasing your vehicle, you could be left with monthly payments toward a car you no longer own.  

Motor GAP insurance can cover this discrepancy, meaning you’ll not only be able to get back on the road as quickly as possible in a vehicle of equal quality but the impact on your business will also be lessened.  

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Also see: Is motor GAP insurance included in my standard insurance policy

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Why has GAP insurance had bad press? 

Last year, the FCA (Financial Conduct Authority) released a report that found only 6% of what motor GAP insurance customers pay into their insurance policy premiums was received in claims. 

This was particularly prevalent in the motor dealership industry where policies were being sold for double what most insurers charge (FCA, 2024).   

This discovery begged the question, are motor GAP insurance providers offering a fair value deal? The FCA was therefore left with no choice but to urge insurers to reassess their policies. 

Initially, the FCA wrote to all insurance firms, requesting they look at their GAP offering and make any changes necessary to ensure they are offering a fair-value product. In February 2024, the action taken was reviewed and was not found to be sufficient.  

Therefore, in February 2024, the FCA took action and recalled 80% of motor GAP insurance products from the market as they were found not to be fair value after the initial request for review.  

Save More Money’s Motor GAP Insurance policies were not included within the 80% and therefore have remained on sale. 

Is motor GAP insurance worth it? 

We can’t determine if GAP cover is suitable for you, as everyone’s circumstances vary and what might be worth it for you wouldn’t be for someone else. 

However, we can highlight some factors to consider when deciding whether you think a motor GAP policy is right for you.  

Why motor GAP might be worth it 

The most notable reason many motorists agree that motor GAP insurance is an important policy to purchase is vehicle depreciation.  

As soon as you drive a car off the forecourt, it begins to decrease in value. So, what you pay for it will often be far more than what it’s worth a month later. 

This becomes a problem if your vehicle is written off or declared a total loss because your standard insurance policy will typically only cover the amount your vehicle is worth at the time of the claim, rather than what you paid for it.  

Therefore, without GAP insurance to cover the discrepancy, vehicle owners might find themselves at a large financial disadvantage, particularly if the car is very new.  

Furthermore, those who purchased their car on finance or are leasing it could find themselves paying monthly instalments for a car they no longer own without motor GAP insurance. 

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Also see: Can I buy GAP insurance online?

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When GAP insurance might not be worth it 

Motor GAP insurance is considered beneficial by many motorists, but there are some situations that might mean you’re not at risk and therefore GAP insurance isn’t worth it for you. For example if you purchased your car on finance or are leasing a vehicle: 

• You paid a significant down payment when purchasing your car: The more you paid towards your vehicle financing or loan upon purchase, the less likely it is you’ll owe more than your car is worth. 
• You took out a short-term loan: Short-term loans (less than 36 months) ensure your balance is more likely to stay close to the vehicle’s value. 
• You plan to pay your loan off quickly: The faster you can pay off your loan, the less likely it is you’ll be out of pocket. 

Or, if you purchased your vehicle outright, you’re less likely to need GAP insurance if you purchased a used car. The depreciation rate on used cars is typically slower than that of new cars, so when you come to make a claim your standard insurance policy is more likely to agree to a sum close to what you originally paid. 

Where can I find a policy that covers taxi and private hire drivers? 

If you’re looking for a motor GAP insurance policy that will cover taxi drivers or private hire vehicles, you should be able to find several options by conducting a quick Google search.  

However, with so much controversy surrounding this policy currently, it’s important not only to do your research into whether the policy is necessary for your circumstances but also how much you should be expecting to pay.  

Motor GAP insurance for taxi drivers and private hire vehicles will usually cost more than a standard policy due to the higher perceived risk. However, that doesn’t mean you should be paying over the odds.  

And, if you’re not sure where to start, consider taking a look at Save More Money’s Hire and Reward Motor GAP Insurance policy from just over £17 per month.