WARNING: Ontario drivers may be left unprotected after purchasing GAP insurance

Ontario's financial services regulator warns vehicle buyers to ensure they are buying coverage from licensed insurers, or they could be paying hundreds of dollars for coverage that may not be valid

TORONTO, July 23, 2026 /CNW/ - The Financial Services Regulatory Authority of Ontario (FSRA) is alerting consumers to the unlicensed sales of Guaranteed Asset Protection (GAP) insurance that may leave some drivers without the coverage they expected.  

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GAP insurance is commonly sold at car dealerships to consumers financing or leasing a vehicle. It is optional coverage designed to cover the financial gap between a vehicle's actual cash value and the remaining balance on a lease or loan if the car is stolen or written off after damage. For example, if $30,000 remains on the loan, and the insurer determines the vehicle's actual cash value is $24,000 the consumer would still owe $6,000. GAP insurance is designed to cover this shortfall.

FSRA has identified GAP insurance being sold by unlicensed businesses and individuals. In some cases, GAP products name an insurer despite no licensed insurer having issued the policy.

"This is very concerning," said Jordan Solway, FSRA's Executive Vice President, Property and Casualty Insurance. "Roughly three-quarters of car buyers lease or finance their vehicles and they may be offered coverage that could leave them exposed. Consumers have paid hundreds of dollars for this coverage and expect to be protected, but their policies may not be valid, and claims may not be honoured."

These products may be presented in a way that deliberately implies they are not insurance to avoid the regulatory and legal requirements that are designed to protect consumers.

For example, GAP insurance offered at some auto dealers may be described as a "loyalty program" and provide a credit toward another car if their original vehicle is stolen or damaged beyond repair. Calling GAP insurance a "loyalty program" does not change the fact that it is insurance and any company selling this product must comply with the Insurance Act.

To ensure that consumers receive the protections they are entitled to, insurance in Ontario can only be sold by licensed insurers, agents, or brokers. If you buy GAP insurance or any other insurance product from someone who isn't licensed, your claim may not be paid.  

"Buying a vehicle is expensive and the process can be complex," said Solway. "Consumers should take time to fully review any coverage they are offered and should only purchase GAP insurance products from a licensed insurer, agent, or broker in Ontario."

Consumers considering GAP insurance should:

• Confirm the name of the licensed insurer underwriting the product.
• Verify the insurer is licensed in Ontario using FSRA's public licence search tools.
• Ensure an agent or broker is actively participating in the sale of GAP insurance.
• Verify the agent or broker is licensed in Ontario.
• Review the contract to ensure it clearly identifies the insurer and policy details.
• Ask questions about how the claims process works.

FSRA will continue to actively monitor the sale of GAP insurance and will take appropriate action when we identify violations of the Insurance Act.

Consumers who have purchased GAP insurance from an unlicensed business or individual may file a complaint with FSRA. Consumers may also contact FSRA at 1-800-668-0128 or by email at [email protected].

For media inquiries:
Russ Courtney
Senior Manager of Media Relations
Financial Services Regulatory Authority
C: 437-225-8551
Email: [email protected]

SOURCE Financial Services Regulatory Authority of Ontario