Different types of gap insurance
There
are mainly three types of gap insurance are available to complete your needs but
you may be given anywhere between 3 and 10 different forms of gap. These
are:
1. Return
To Invoice gap (RTI)
2. Vehicle
replacement gap (VRI)
3. Return
to value gap (RTV)
Return
To Invoice gap (RTI):
RTI
gap covers you for the distance between a demand on your car insurance (C.I.) and the amount you really paid for the cars (the invoice price).
Such
example: If you write off a car you paid
£30,000 for after 19 months, you may only receive £16,000 (its current market
value) from your standard C.I., leaving you £14,000 out of pocket. If
you had a return to invoice policy you would be able to claim the £19,000 back
to make up the difference.
Return
to value gap is equally eligible for those who purchase a new car as
it is for those who purchase a used car, but it’s limited to those who have
very currently purchased their cars.
Auto
replacement gap (VRI):
Auto
Replacement Insurance creates the difference between the volume you receive for
a ‘total loss’ claim on your C.I. and the charge of an exact
replacement, even if its cost has gone up.
If
you have a comparatively new cars this would mean you would get a brand new
replacement of the equivalent make, model and specification as you had earlier. If that model had been superseded by a new version, you
would get the latest cars even if it was more costly. If you had second hand
or used cars, you would get replacement cars that was as nearly matched to
yours in terms of specification and mileage as possible.
Return
to value gap (RTV):
RTV
gap is planned for people who do not take out a policy instantly upon
selling their car, but rather a couple of months down the line. It makes up the
distance between the ‘market value’ payout you get from your C.I.
company, and the volume your cars was worth when you accept gap.
This
type of policy can be for cars purchased new or second hand; however it cannot
be taken out instantly (that would make it Return To Invoice insurance)
so is usually only available to those that have bought their cars for a certain
number of months.
When
you accept a return to value gap policy the insurer will get an
assessment of the present market price of your car from an independent third
party. This is the most you will be able to claim for your autos on the policy.
For example:
Say
you purchase a car for £25,000. You then accept a policy 6 months later when
your car is valued at £19,000. One year on from that you write your car off and
receive £12,500 from your C.I. company (its market value at the time):
your RTV gap insurance policy would pay out the £9,000 difference.
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