Car Gap Insurance

Gap Insurance is an product which allows purchasers to sleep easy in the knowledge that if their car is declared a total loss through accident, theft or vandalism they will be reimbursed with a sufficient payout to replace their car with similar or better.

DON'T BUY GAP INSURANCE FROM A DEALER BEFORE CHECKING PRICES FROM OUR PANEL! DEALING DIRECTLY THROUGH ONE OF OUR PARTNERS CAN CUT YOUR COSTS BY 75%!

Visit Click4gap and helpucover through Warranty Direct for a quotation now.

Normal car insurance is designed to return your situation to the same position as it was the moment before any incident occured, but many feel that that is unlikely to enable them to continue motoring as they would to wish to so buy Gap Insurance.

It also protects those who have bought a new or relatively new car on finance, when depreciation is likely to eat into the value of a car significantly in the early days, meaning any loan taken out to purchase the vehicle is likely to be larger than the insurance payout. In this situation the driver could end up with a residule balance on their loan, no deposit to buy a new vehicle leaving them with limited options to replace the vehicle.

There are a number of Gap Insurance products, covering different levels of cover, the main ones being:

Return to Invoice (RTI) Cover

If you insurer decides your car to be a "total loss" through theft, vandalism or accident, they will normally only pay the loss value - i.e. the value of your car on the date of loss, not the invoice price (purchase value when you bought the car or policy).

Return to Invoice Gap Insurance will pay the depreciation, - meaning the difference between the invoice price (purchase value) and loss value of your car paid out by your insurer - allowing you to either buy a similar car to that you orginally purchased or repay any loans and still have a deposit towards a new vehicle.

Return to Value (RTV) Cover

If you bought a car two years ago for £7000 your insurance company will take that into consideration when calculating your 'loss'. Say the car that has been a declared a total loss is now four years old they will work from your original purchase price, deduct a sum for depreciation, wear and tear etc. and offer you that. They may not be enough to enable you to buy another similar aged car with similar mileage etc, as car prices have risen in the meantime.

This type of Gap Insurance will look at the current market value of the car you had, and recompense you the difference between the amount the insurer has paid you, and the price you would have to pay for a similar vehicle.

Vehicle Replacement Insurance Gap (VRI)

If you bought a new vehicle this insurance means you will be paid the difference between the amount your car insurer offers you and the cost of a similar new car.

Who offers Gap Insurance?

Two of the largest Gap Insurers, and ones with the best reputation are Click4gap and the helpucover range through Warranty Direct. They are well established, fully FSA authorised, yet offer remarkable value, especially compared to the deals on offers from Car Dealers themselves - we regularly see saving of 50% or more over the Car Dealership quotations.

We suggest getting a quotation through both companies and deciding on the options you prefer.

This information is based on journalistic investigation and research. It is not financial advice. Any information should be considered in regard to specific circumstances. Any suggestions followed up are done so at your own risk and your own research is key.

Image published with the kind permission of Graur Razvan Ionut / FreeDigitalPhotos.net