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GAP Insurance Rules Change

24th August 2015

The Financial Conduct Authority have introduced new rules after a market study into the selling process of insurance add-ons.

From 1st September 2015, dealers selling GAP insurance in connection with the sale of a motor vehicle as an add-on will be required to provide customers with prescribed information to help them shop around and be more engaged when making decisions about purchasing the product, and also introduce a deferral period, which means GAP insurance cannot be introduced and sold on the same day.

The FCA have stated that they expect to see better customer outcomes from more informed purchasing decisions, and improved competition between add-on and standalone distribution channels as a result of these measures.

Prescribed Information

The total premium of the GAP contract, separate from any other prices

The significant features and benefits, significant and unusual exclusions or limitations, and cross-references to the relevant policy document provisions

Whether or not the GAP contract is sold in connection with vehicle finance, that GAP contracts are sold by other distributors

The duration of the policy Whether the GAP contract is optional or compulsory When the GAP contract can be concluded by the dealer

The date the information above was provided to the customer  

This information must be communicated in a clear and accurate manner and in writing (or another durable medium), and made available and accessible to the customer.

This information must be drawn to the customer’s attention and must be clearly identifiable as key information that the customer should read.

Four day deferred opt-in period – (two clear days) Dealers cannot conclude the sale of the GAP insurance product until at least 2 clear days have passed from providing the prescribed information to the customer.

For example:

Day 1 : Prescribed information provided to the customer

Day 2 : Clear day – no customer contact

Day 3 : Clear Day – no customer contact

Day 4 : Contact customer / complete sale Customers are able to opt-out of the deferral period and the dealer conclude the GAP insurance contract the day after providing the prescribed information – but only if the customer initiates it themselves, and confirms that they understand the normal deferral period is 2 clear days but give consent to the dealer concluding the sale early.

Longer deferral periods

The FCA recommends that dealers should also consider whether it is in their customer’s interests to receive the prescribed information again, in cases where a long time has passed between providing the information and conclusion of the contract.



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