GAP insurance, or Guaranteed Asset Protection, covers the difference between your car’s current market value and the remaining amount on your loan or finance agreement if the car is written off in an accident or stolen. This means that if you owe more than what the insurance company pays after a total loss, GAP insurance steps in to cover the gap.

Demand for GAP insurance has surged in the UAE in 2025 for several reasons. Car prices have jumped, making loans longer and more expensive. Many cars lose up to thirty percent of their value in the first year, especially luxury and electric models. On top of that, a large share of buyers rely on bank or dealership financing, which increases the risk of owing more than the car is worth. Natural events like floods and rising accident rates in places like Dubai and Sharjah have also made total loss claims more common, making GAP insurance more valuable than ever.

Not all GAP insurance policies are created equal. The most common option is Finance GAP, which pays off the remaining loan balance if your car’s value is less than what you owe. Return to Invoice GAP covers the difference between your car’s current market value and the price you originally paid, which is often higher than the loan amount. There is also Replacement GAP, which helps you buy a brand new car of the same make and model if your vehicle is totaled.

Who really needs GAP insurance in the UAE? It is strongly recommended for anyone buying a new or used car with a loan, especially if you choose long repayment terms or finance more than eighty percent of the car’s price. Owners of cars that lose value quickly, like high end vehicles or electric cars, are also good candidates. If you live in an area prone to floods or major highway accidents, GAP insurance provides an extra layer of financial safety. The annual cost usually ranges from five hundred to fifteen hundred dirhams, depending on the policy and the value of the car.