MEMA Scope · Assessment

Do GAP insurance and warranty sellers need FCA authorisation?

A business, often a dealer, sells GAP insurance, extended warranties or similar add-on protection alongside the goods it supplies. Review the initial view below and answer a few questions to refine it.

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  • FCA rule references
  • Follow-up questions available
Initial viewProvisional assessment

Outcome depends on the detail

Selling add-on protection may be insurance distribution

Whether a warranty is insurance depends on who bears the risk and how it is structured. If it is insurance, selling it can be insurance distribution needing authorisation or appointed representative status.

Route to consider: Appointed representative of an authorised principal, or direct authorisation

Insurance Distribution - Arranging

Why this was flagged

  • 1GAP insurance is a contract of insurance, and selling or arranging it is insurance distribution.
  • 2Some warranties are insurance and some are not, depending on the structure.

Questions still to resolve

Answer to refine the view. The result updates as you go.

  • ?

    Is the product sold with a mechanically propelled road vehicle?

  • ?

    Is it a manufacturer or retailer warranty under which the supplier itself promises to repair or replace, rather than an insurer paying out?

  • ?

    Do you sell the product under an authorised intermediary that takes responsibility for you?

Regulatory basis to examine

PERG 5 Guidance on insurance distribution activitiesPERG 5: insurance distribution (opens in a new tab)PERG 6 Guidance on the identification of contracts of insurancePERG 6: identifying contracts of insurance (opens in a new tab)RAO Art.72B Activities carried on by a provider of relevant goods or servicesExclusion for providers of relevant goods or services (opens in a new tab)ICOBS 5 Identifying client needs and advisingIdentifying client needs and advising (opens in a new tab)

Your next steps

  1. 1Identify who bears the risk under each product and whether it is a contract of insurance
  2. 2Check the Art.72B exclusion conditions product by product
  3. 3Decide whether to sell as an appointed representative or hold permission
  4. 4Review product governance and fair value arrangements

Where applications for this model most often fall short

  • A product-by-product analysis of whether it is insurance
  • Evidence of provider and underwriter arrangements
  • A sales process that evidences customer needs and fair value
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This is an initial indication from published FCA material, not an FCA determination or legal advice.

Continue with a more detailed readiness assessment

If authorisation is required, check the firm’s governance, policies, resources and application preparedness.

Will the FCA Authorise Us?

MEMA Scope gives an initial view from published FCA material. It is not legal advice or an FCA determination. Automatic matching and typed questions use AI only to choose a profile and to answer from vetted guidance; the assessment itself is never written by AI.

About this business model

A business, often a dealer, sells GAP insurance, extended warranties or similar add-on protection alongside the goods it supplies.

Whether a warranty is insurance depends on who bears the risk and how it is structured. If it is insurance, selling it can be insurance distribution needing authorisation or appointed representative status.

This page gives an initial view from published FCA and legislation sources. It is not an FCA determination or legal advice. Not your business model? Describe your business in MEMA Scope.

GAP insurance or warranty seller: frequently asked questions

Is GAP insurance regulated?

GAP insurance is a contract of insurance. Selling or arranging it is insurance distribution, which needs authorisation or appointed representative status unless an exclusion applies.

Are extended warranties insurance?

It depends. PERG 6 explains how to identify contracts of insurance and includes manufacturers’ and retailers’ warranties as an example where the answer turns on the facts.

What could change the answer for GAP insurance and warranty sellers?

Whether a warranty is insurance depends on who bears the risk and how it is structured. If it is insurance, selling it can be insurance distribution needing authorisation or appointed representative status. It can change depending on the answers to questions such as: Is the product sold with a mechanically propelled road vehicle? Is it a manufacturer or retailer warranty under which the supplier itself promises to repair or replace, rather than an insurer paying out? Do you sell the product under an authorised intermediary that takes responsibility for you?

Which FCA rules should GAP insurance and warranty sellers look at first?

Start with: PERG 5: insurance distribution; PERG 6: identifying contracts of insurance; Exclusion for providers of relevant goods or services; Identifying client needs and advising. This is an initial view from published FCA material, not an FCA determination.

What are the first steps for GAP insurance and warranty sellers?

Identify who bears the risk under each product and whether it is a contract of insurance. Check the Art.72B exclusion conditions product by product. Decide whether to sell as an appointed representative or hold permission. Review product governance and fair value arrangements.

Businesses we check

MEMA Scope covers 32 common business models. Each page explains whether that kind of business may need FCA authorisation, the rules to look at and the routes to consider.

Want a consultant to look at your facts?

Book a free scoping call and we will map the permissions, evidence and timeline for your firm.

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