The Different Types of Gap Insurance

So, what exactly is Gap Insurance? Well, there are three basic options. 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 motor dealer invoice value, 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?

Return to Invoice Gap (RTI) Gap Insurance

RTI gives you added protection if your car is declared a total loss, paying the difference between your motor insurer’s settlement and the original amount you paid for your car.

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.