The Different Types of Gap Insurance
So, what exactly is Gap Insurance? Well, there are three basic types of Gap Insurance. If your car is beyond repair the amount paid based on the value of the vehicle could be less than the outstanding balance on your loan, or what you paid for the car. Gap Insurance should cover the difference between the Insurer’s pay-out and the purchase value of your car, or the outstanding finance amount. This insurance is intended to cover the gap between the two amounts to ensure vehicle owners aren’t left out of pocket.
GAP is short for Guaranteed Asset Protection. Today you can buy directly from the Gap Insurers themselves, saving amounts well in excess of 50% of premium. But there are so many options, that consumers are sometimes overwhelmed.
Gap Insurance has options available to you whether you paid cash for your car, or borrowed the money from a Bank, took out a Motor Loan, or even chose a Lease or Contract Hire Agreement to fund it.
It is available to companies and private individuals on vehicles up to the age of seven years, that have travelled less than 80,000 miles, and provide cover for a maximum period of four years, regardless of when you bought the vehicle. So, what are these options and what are they best for?
Related Reading: Click4Gap Ranked #1 On MoneySavingExpert For Gap Insurance
Return to Invoice (RTI) Gap Insurance
Return to Invoice car insurance, often referred to as RTI insurance, is a valuable protection for vehicle owners. This type of insurance provides peace of mind by ensuring that in the unfortunate event of a total loss or theft of your car, you will receive a payout equal to the original invoice price you paid for the vehicle, rather than its depreciated current market value. RTI insurance bridges the gap between what your comprehensive motor insurance policy covers and the amount you need to replace your car with a brand-new one. It’s a smart choice for those who want to safeguard their investment and ensure they can afford a similar vehicle in case of an unforeseen mishap.
Finance Gap Insurance
This is available for vehicles financed under a Finance Agreement other than a Lease or Contract Hire Agreement. For example, hire purchase, lease purchase or personal contract purchase (PCP). With Finance Gap Insurance you’re covered the shortfall between the market value of your car, which is what you motor insurer will cover, and the outstanding balance on your finance agreement.
Combined Return to Invoice Gap (RTI) Gap Insurance
Combined RTI gives you the benefit of both of the above, covering you for the difference between your motor insurer’s settlement and either the original amount you paid for your car, or the outstanding balance on your finance agreement.
Vehicle Replacement (VRI) Gap Insurance
Basically this is the highest level of cover available from most insurance companies. VRI insurance gives you added protection if your car is declared a total loss by covering the cost of a brand new replacement. VRI will pay the difference between the settlement you receive from the motor insurer and the cost of a replacement new vehicle, even if the retail price has increased.
Return to Value (RTV) Gap Insurance
This will return the value of your car by paying the difference between the motor insurer’s settlement and the value of your car today, covering your car’s depreciation in the event of total loss.
Do You Need Gap Insurance?
Here are a few factors to consider, depending on the ownership situation of your vehicle, when deciding if you need gap insurance:
Loan or lease: If you have financed your vehicle with a loan or lease, gap insurance can be beneficial. It protects you from being responsible for the outstanding loan balance if your vehicle is declared a total loss.
Vehicle depreciation: New cars can lose value quickly due to depreciation. If you purchased a brand-new vehicle, the actual cash value of your car may be significantly lower than the amount you owe on your loan during the early years of ownership. In such cases, gap insurance can be valuable.
Down payment and loan term: If you made a small down payment on your car or have a long-term loan, the chances of owing more on your loan than the vehicle’s value are higher. Gap insurance can provide added protection in such situations.
Resale value: If you plan to sell your vehicle before paying off your loan or lease, gap insurance may not be necessary. However, if you expect to keep your vehicle for an extended period, gap insurance can offer peace of mind.
It is essential to review your specific circumstances, consult with your insurance provider, and consider the terms of your loan or lease agreement when deciding whether or not to purchase gap insurance. They can provide you with more accurate information based on your situation and help you evaluate the potential benefits and costs of gap insurance coverage.
Related Reading: A Comprehensive Guide To Gap Insurance
Choosing The Right Gap Insurance For Your Car
Whichever method you choose to pay, there is a GAP insurance policy that is right for your vehicle, personal circumstances and financial position. GAP insurance is available for new and used cars.
If you paid cash for your vehicle, or paid a sizeable deposit, or if you financed it, Combined RTI Gap cover will pay out the shortfall between the cost of your vehicle and the market value at the point of claim, which is the amount your motor insurer will cover. This is cover that will protect you no matter if you use your vehicle for private use or for business.
If you leased your vehicle or it is under a contract hire agreement, Lease/Contract Hire Gap Insurance will cover you for the shortfall on your lease agreement, after your motor insurer settlement. If, for any reason, you change your vehicle within the first 90 days from the start date, we will also arrange to transfer your cover to your new vehicle without hassle or charge.
Can you pay Gap Insurance monthly?
If you’re looking for the convenience and affordability of a monthly payment option, Click4Gap offers you a non-financed agreement that enables you to pay a 20% deposit on purchase, followed by nine monthly instalments to cover the balance.
You won’t be signed up to a credit agreement, we’ll require no credit references or searches, and it isn’t subject to any changes in interest rates. For more on paying monthly for Gap Insurance click here.
Contact Click4Gap Today!
Looking to take out GAP insurance? We are here to help. Hop on our Live Chat, call us any time Monday to Friday, 9am to 5pm on 0208 819 3424, or Email us and we’ll get back to you during office hours.