On July 23, 2026, the Financial Services Regulatory Authority of Ontario (FSRA) issued a warning regarding the unlicensed sale of Guaranteed Asset Protection (GAP) insurance in Ontario. GAP insurance covers the gap between a vehicle's outstanding loan or lease balance and its actual cash value in the event of a total loss.

Of concern is that consumers may have paid hundreds of dollars for protection and may find their policies invalid and their claims not honoured.

The issue

That FSRA has issued such a warning is not surprising given its earlier enforcement action against Assureway Protection Corporation, a company that was never a licensed insurer and that had been selling GAP to consumers through motor vehicle dealers across Ontario.

FSRA, it appears, has since identified other GAP products being sold by unlicensed businesses and individuals, without a properly licensed insurer on risk.

Why it matters

In the warning, FSRA describes the unlicensed sale of GAP insurance as “very concerning.” With roughly three-quarters of Ontario car buyers financing or leasing their vehicles, a significant number of consumers are potentially exposed to this issue. FSRA has found cases where GAP products reference an insurer on the policy, even though no licensed insurer underwrote the coverage, giving consumers a false sense of security.

GAP insurance is also being offered under alternative labels such as "loyalty programs" to sidestep regulatory requirements, but FSRA stresses that relabeling the product does not exempt it from the Insurance Act.

FSRA's response

FSRA plans to monitor the sale of GAP insurance in Ontario and take appropriate enforcement action where violations of licensing requirements are uncovered.

Takeaway for industry clients

While the sale of incidental insurance products in Ontario, including GAP, through unlicensed vehicle dealerships, has been a long-standing and known market practice, it appears the regulatory environment of acceptance has changed.

Those involved in distributing or facilitating GAP insurance in Ontario should:

  • Confirm that the product they offer is underwritten by a properly licensed insurer.
  • Ensure that coverage documentation to be provided to the consumer includes the insurer’s full legal name.
  • Verify the licensing status of those involved in the sale of GAP insurance.

If you have any questions, please contact the authors.