What is Return to Invoice & how can it work for you?
Return to Invoice Gap Insurance is the most popular level of cover for dealerships to offer, therefore you may already have an idea of how the cover works and performs, but lets take a closer look.
In brief, Return to Invoice Gap Insurance is designed to pay the difference between your vehicles valuation on the day it is declared a total loss (i.e written off, stolen or flood damage etc.) and the original invoice price you have paid.
Due to levels of depreciation, your own motor insurer would only ever pay you a fraction of the purchase price you've paid. However, with Return to Invoice GAP, you are returned back to the original purchase price. If you have any outstanding finance attached to the vehicle, this is then cleared and the balance left over, comes back to you.
You may be looking to just simply clear the amount outstanding on finance should the worst happen, Return to Invoice Gap Insurance will still do just that and more. As mentioned in brief previously, this policy will always clear what you owe on the finance within any settlement and the funds left over will be returned to you.
Based on current rates of depreciation we expect the average vehicle to lose as much as 50% over a three year term. As you can see from the figures below, some vehicles will lose as much as 50% in the first year. We must highlight that the below is an extreme example based on an electrical vehicle in low demand, but we have highlighted it as very much a possibility.
Combined Return to Invoice Gap Insurance Example
Original Invoice Price: £31,680
Motor Insurance Settlement: £10,650 (After just 2 years)
Outstanding Finance on the Vehicle: £15,650
Gap Insurance Settlement: £21,030
GAP + Motor Insurance Settlement = £31,680
Amount left after finance is cleared: £16,030
There can be a big difference in the price of Gap Insurance depending on where you buy it. It is highly likely that you will have recently purchased a vehicle and been offered Return to Invoice Gap from the dealership at a price of £399 or in some cases more, but how much should you be paying?
The risk is based on a number of key features, the first being the price of the vehicle in question, the second being the claim limit (i.e the amount the policy would expect to pay in the event of a total loss) and the third the length of cover. If we work on the average figures, average vehicle price being £20,000 and the average length of cover being three years, we can give you the current price of a Return to Invoice policy.
This means that the average price for a Combined Return to Invoice Gap Insurance at Shortfall.co.uk is £98.99. Less than £100 for the full three years cover.
Why is there such a big difference in the price?
The first reason is supplier rates. Being part of Aequitas Automotive Limited, we specialise in Gap Insurance and currently have four separate brands all of which cater for different vehicles and circumstances. Because of the sheer volume of products we provide on a yearly basis in the UK, we can negotiate not only the best policy features, but also the best price.
The second reason is a taxation reason. Currently the rate of Insurance Premium Tax (Tax on Insurance) is charged at 12% independently. However, the dealership are charged at the same rate as VAT which is 20%. This is due to them having the ability to manoeuvre the figures and potentially avoid paying as much tax. Last but not least, rates of commission. When you purchase Gap Insurance through Shortfall.co.uk or another Aequitas associated brand, no-one you speak to is ever commission based, whereas within the dealership or finance companies the same may not be said.
We have been featured within the Which? Report on Gap Insurance for a number of consecutive years with a number of associated brands also being featured within Martin Lewis Money Saving Expert review into GAP. Both of which go into great detail on the differences in price and the saving you should be making when purchasing this form of insurance. If you haven't already read the above reports, it may be worth doing so to gain the reassurance you need to purchase a policy independently.
Is Return to Invoice Gap Insurance is best for you?
Compare policy features and the general ability of a Return to Invoice policy against the others on offer. If you need a quick reminder of how this type of Gap Insurance will perform for you in the event of a claim, simply click the tab above. Simply put, the idea of Return to Invoice Gap is to top you back up to the original purchase price you have paid for the vehicle, but is this the best level of cover for you?
Most dealerships and finance companies will always offer you this type of GAP protection assuming that it's the best level of cover for you, however, this may not be the case. The most obvious case in which it's not, is if you have taken the vehicle on a form of lease or contract hire agreement where you have no option to own the vehicle. This is because you don't officially have an invoice for the vehicle, as you are due to hand the vehicle back at the end. Therefore, under those circumstances the most suitable policy for you is Lease/Contract Hire Gap Insurance.
If you have purchased your vehicle on a form of finance where you have the option to own, or if you have been in the fortunate position of paying cash for your vehicle, you will have another option to you. This form of Gap Insurance is Combined Vehicle Replacement GAP. One of the most often asked questions with Gap protection, is what's the difference between Return to Invoice and Vehicle Replacement GAP?
Simply put, if the vehicle is declared a total loss, a Combined Vehicle Replacement GAP will top you back up to the cost of replacing the vehicle with another 'like for like' vehicle (i.e same make, model, age, mileage and condition etc.) as when you first took delivery/drove the vehicle home. This is seen as being the most comprehensive form of protection, as this policy has the ability to take you up and above the original purchase price you have paid for the vehicle. If you have purchased a brand new vehicle, it is more than likely that the cost to replace it and buy another brand new version in the future, would be more expensive. Therefore, this policy may be more suitable for you.
Finance with no option to own the vehicle = Contract Hire/Lease Hire Gap Insurance
Finance with the option to own the vehicle = Combined Return to Invoice Gap | Combined Vehicle Replacement Gap
Cash/Personal Loan = Combined Return to Invoice Gap | Combined Vehicle Replacement Gap
Market leading policy features at market leading policy prices. Don't pay more than you have to for comprehensive Combined Return to Invoice Gap.
£750 Excess Contribution - With Shortfall Gap Insurance, there is no excess to pay, instead we contribute the first £750 towards your own motor insurance excess. The standard excess contribution is usually £250, which means that if you have an excess of £350, you're paying the first £100, but not with Shortfall.co.uk.
Fully Transferable - If you change the vehicle earlier than expected, we can transfer the policy over completely 'Free of Charge' to your next eligible vehicle.
FCA Regulated & FSCS Backed - We are regulated by the Financial Conduct Authority to provide and sell policies, the policies themselves are backed by the Financial Services Compensation Scheme.
UK Based - Whether you call to make a claim or to make any policy amendments, all corresponding offices are based in the UK.
Never Any Administration Fees - We never charge any administration fees, whether that be a change of address or registration change.
'A' Rated Underwriting Insurer - Our underwriter, Mapfre | Abraxas have been financially 'A' Rated.
30 Day Cooling Off - You have a full 30 day cooling off period, within which if you cancel your policy you can obtain a full refund.
Pro Rata Refund - Circumstances are always changing, which is why we give you the option of cancelling outside of the 30 day cooling off and obtaining a pro rata refund which is less a cancellation fee.
If you have any questions or queries on the policy features, please don't hesitate to contact a member of the award winning customer service team on 0800 195 4926/0151 647 7556.
Making a return to invoice gap insurance claim is never something nice, simply because something terrible will have just happened.
Either your vehicle has been stolen or even worse you may have been involved in an accident. In either case, the exact reasons as to why your own insurance company have decided to write your vehicle off can be very upsetting and very traumatic. We totally understand and would remind you that we are here to help at every step of the way.
Even though we cannot start any claim until your own insurance company write to you to confirm that they are going to write your vehicle off, we would request that you contact us. Although, you don't officially have to contact us immediately, we always request that you do so at the earliest opportunity. This is to ensure that everything runs as smoothly as it can do for you and that settlement is paid out as quickly as possible.
We are also here to help and support you at what can be, a very stressful time. When you have initiated a claim, the claims team will issue you with a claims pack and request copies of certain bits of paperwork. Also, within the claims pack we always ask you to sign over authority for us to speak directly to your own motor insurance, we do this to take all the stress and hassle away from you and again it leads to the claim being settled as quickly as possible.
If you are currently looking to process a claim, please contact the customer service team on 0800 195 4926/0151 647 7556 and any member of the team will be able to talk you through the process and put you in touch with the corresponding claims team. Alternatively, if you have copies of your policy documentation, simply follow the listed claims procedure.