The longer this drags on, i'm thinking will my payout become less should I take the car insurances offer?
the GAP usually only kicks in if the payout doesnt cover the cost of the finance. If your payout is less than the finance, and the finance company ask you to haggle a higher offer, its because they want to avoid having to pay out the gap policy. Not so you can have money in your pocket
you wont see a penny of this unless your payout is greater than the finance and costs incurred (such as the motorway barrier)