What is Return to Invoice Gap Insurance?
What is Shortfall Return to Invoice Gap Insurance?
Gap Insurance is designed to supplement your comprehensive insurance and protect you against any financial loss, if in the unfortunate case your car, motorbike, van, motor home is written off. Return to Invoice Gap Insurance in theory protects the invoice price you paid for your vehicle. Your comprehensive insurer will only pay you the market value of your vehicle at the time it was written off, therefore leaving you with a financial shortfall. Gap Insurance will bridge this outstanding amount.
The problem with Gap Insurance is that the majority of drivers are unaware of how important it can be for them. I say 'can be' as at the end of the day, every one takes out insurance with the hope they will never have to use it. This easy to read article has been designed to help your understanding of Gap Insurance. For illustration purposes, we will use Edwina and her £20,000 Volkswagen Golf. Three years down the line, Edwina wakes up to see her beloved Volkswagen, in which she kept in immaculate condition, has been stolen. After contacting the local police, they inform her that the Volkswagen has been found and is now written off.
Gap Insurance protects you if your vehicle has been stolen, set alight or written off. Edwina goes through the usual comprehensive insurance procedure, who inform her that they will pay her a settlement figure of £10,000, as this was the market value of the Volkswagen Golf at the time of the incident. Why? Because the Volkswagen has depreciated. This is the case for every car as soon as it drivers out of the show room. The problem is that UK drivers are simply unaware of how disastrous deprecation rates are. Industry experts say that the average car depreciates by up to 50% in the first three years.
So, Edwina has now received £10,000 from her comprehensive insurer. However Edwina is still £10,000 down, through no fault of her own. It was not her fault her car was stolen and it certainly was not her fault that her car has lost £10,000 in value.
This is were Return to Invoice Gap Insurance comes into play. It will protect Edwina from the financial lost which has occurred. It will pay her a settlement claim of £10,000. Edwina now has £20,000 from both her comprehensive and Gap insurer. Edwina is now free to use this money how she sees fit. Please note that Gap Insurance does not reimburse you your road tax, as this can be claimed back from the DVLA. Click the link for more information about Return to Invoivce Gap Insurance and for a low-cost quote.