The global GAP (guaranteed asset protection) insurance market was worth USD 3.79 billion in 2023. The global market size is predicted to be worth USD 4.25 billion in 2024 and USD 10.52 billion by 2032 with a CAGR of 11.99% during the forecast period.
The increased frequency of vehicle accidents worldwide has increased the demand for Guaranteed Asset Protection (GAP) Insurance. In addition, the market's expansion has been greatly aided by increased urbanization and the sale of passenger cars. Suppose the vehicle is involved in an accident or collision. In that case, the borrower's residual gap between the vehicle's actual cash value and the amount left to be paid to the lender is covered by a guaranteed auto protection insurance policy. Furthermore, GAP insurance is often used for both new and used vehicles. Therefore, in most cases, if a person buys an automobile with finance, they must get GAP insurance. A credit company usually offers GAP insurance at the time of purchase. Most auto insurance companies provide this coverage to their customers. Because GAP insurance is often paid in advance, the buyer is entitled to a refund if the car is sold or refinanced. There are two ways to receive GAP coverage. The first is a policy purchased through a broker. The second form is a waiver agreement, which is sold by a Finance & Insurance Manager. The first is regulated by the insurance industry, whereas the second is unregulated.
Increased awareness of protection against borrowers' unexpected losses among self-financing organizations and auto leasing dealers. As a result, owners and buyers are required to take GAP insurance policies, driving the growth of the Guaranteed Asset Protection (GAP) Insurance Market. On the other hand, the rising popularity and demand for auto finance need GAP insurance coverage. Because of these considerations, the industry is expected to have a lot of opportunities during the forecast period.
Moreover, the rise in benefits of artificial intelligence (AI) technology across numerous industry verticals has significantly developed the automotive insurance business. The technology enables vehicle insurance companies to give continuous service to their customers, including a live speed limit tracker and customized GAP insurance coverages. Furthermore, AI is in high demand in the GAP insurance industry for features like seamless streaming of client insights, automatic claim services, automated underwriting, and predictive analytics.
Increased competition, a lack of information about guaranteed auto protection insurance advantages and shifting policy criteria limit market growth. On the other hand, the considerable increase in the severity of theft claims for motor traders and fleet owners has prompted concerns in the Guaranteed Asset Protection (GAP) Insurance Market.
COVID-19 has affected primary disruptions in the commercial sector in various firms across the globe. Moreover, owing to strict lockdown circumstances in many nations, car sales have dropped considerably, and the epidemic has impacted vehicle sales policies. In addition, a drop in new policy sales has caused many car dealerships to close their doors temporarily.
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REPORT METRIC |
DETAILS |
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Market Size Available |
2023 to 2032 |
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Base Year |
2023 |
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Forecast Period |
2024 to 2032 |
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CAGR |
11.99% |
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Segments Covered |
By Type, Application, and Region |
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Various Analyses Covered |
Global, Regional & Country Level Analysis, Segment-Level Analysis, DROC, PESTLE Analysis, Porter’s Five Forces Analysis, Competitive Landscape, Analyst Overview on Investment Opportunities |
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Regions Covered |
North America, Europe, APAC, Latin America, Middle East & Africa |
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Market Leaders Profiled |
American FamilyNationwide Insurance, Travelers, Allianz, Allstate, State Farm, Esurance, AXA, Aviva and Others. |
Financial institutions or banks use finance GAP insurance to cover their risks in the global guaranteed asset protection (GAP) insurance market. There are two critical reasons for their usage: first, they can provide vehicle finance and buyback agreements with warranties of up to 100% of the original purchase price; second, they provide consumers with a simple way to receive car loans without having to pay any money upfront.
Return-to-invoice GAP insurance helps cover the gap between the vehicle's original invoice price and the net invoice price. Consumers leasing or acquiring a car with an option agreement are more likely to purchase this coverage. It can also be used in the event of a theft or accident that reduces the car's value below what it was when it was first financed.
GAP insurance is a lucrative sector, and Vehicle Replacement GAP insurance has grown in popularity in recent years. The increase can be linked to various factors, including the expansion of social media, an increase in accidents caused by distracted driving, an increase in the frequency of car thefts, and so on. Another reason why this product is growing more popular is because it offers more appealing benefits than the other two goods.
For those unable to find a cheap automobile, Return-to-Value GAP insurance may be a viable option. The policy is sometimes referred to as "gap insurance," although it covers the difference between the amount owed on the vehicle and its trade value when it was written off or stolen.
A pay-out protection package is another name for it (PPP). Apart from protecting against loss or theft, this sort of insurance also provides reimbursement if the insured is at fault for the damage. Therefore, nothing is left to pay after deducting compensation if blame cannot be eliminated by law.
Passenger automobiles are becoming more popular as a means of transportation, and this trend is projected to continue. Furthermore, rising disposable incomes, along with a growing desire for mobility at all levels, have triggered an expansionary trend toward passenger cars, which will occasionally raise demand for GAP insurance plans. Furthermore, car manufacturers are introducing new technologies such as autonomous vehicle driving capability, which may necessitate a higher investment on the part of the driver/owner, resulting in higher adoption rates due to increased concern about accidents and other losses associated with traditional modes of transportation.
Commercial vehicles are a crucial element of every business, and they account for a large number of GAP Insurance claims each year. In other words, if this sort of vehicle is involved in an accident on the road, it will result in high bills because these vehicles are exclusively used for business purposes. In addition, because many businesses rely on trucks and vans daily, securing them becomes vital for the firm and the dependent personnel.
North America will be the world's largest market in terms of both size and revenue. The US is predicted to dominate this region during the projection period, while the Canadian GAP Insurance Market will also rise at a respectable rate.
Latin American economies, such as Brazil's, are expanding and can expand their GAP Insurance markets. In addition, Argentina, Colombia, Ecuador, and Peru are just a few Latin American countries provide excellent investment prospects in their various insurance markets, both economically and through risk management tactics over time.
Europe continues to have lower car ownership rates than other regions globally, but it still has room to expand in the GAP Insurance market. Insurance businesses in Germany, France, and Italy are making significant investments both domestically and globally that will assist their respective countries to thrive over time.
The Asia-Pacific area is quickly developing, with significant economic growth. Due to a greater incidence of accidents per vehicle than any other place worldwide where automobiles drive on public roads, the associated increase in car ownership rates has resulted in a surge in demand in GAP Insurance Markets. In addition, this area contains a broad mix of economies, including Australia, Japan, and China, all of which continue to benefit from technological innovation, resulting in a market that is likely to be both present and increasing in the coming years.
Because it was first introduced in the North American region, the North American area has the largest market share. However, as disposable income in the APAC region rises due to high employment and GDP growth, the auto sector is expected to expand significantly, fueling the growth of the Guaranteed Asset Protection (GAP) Insurance Market in the APAC region.
Companies playing a key role in the global virtual machine market include American Family Nationwide Insurance, Travelers, Allianz, Allstate, State Farm, Esurance, AXA, and Aviva.
Nationwide has announced that qualifying members of Amazon's Business Prime will use its Coverage Assistant service. Members will complete an online evaluation and quote and then connect with an agent to obtain a special discount using the technology.
With the sale of the Allstate Life Insurance Company of New York to Wilton Re for about USD 400 million, Allstate Corp. came closer to its complete exit from the life insurance and annuity sector.
By Type
By Application
By Region
Frequently Asked Questions
As of the latest report in 2024, the global GAP insurance market is estimated to be valued at USD 4.25 billion.
North America and Europe currently hold the largest market shares, accounting for approximately 45% and 30% respectively.
Increasing automobile sales, rising awareness about financial protection, and a growing preference for comprehensive coverage are key drivers of market growth.
The market is projected to witness a CAGR of 11.99% from 2024 to 2032, indicating sustained growth driven by emerging economies and technological advancements.
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