What level of cover can Shortfall Insurance provide to your Honda?
This page has been designed to assist your understanding of Gap Insurance and to help you recognise how important it is to not just your Honda, but most importantly to your finances.
In these examples, we use Tracy and her Honda Civic, which she paid £10,000.
We are aware that the majority of our customers first learnt about Shortfall Gap Insurance while at their local Honda dealership and here they were quoted anything in between £399 to £1000. We have even dealt with customers who were quoted even greater.
At Shortfall.co.uk, we give customers access to a range of policies for as low as 85% of the average Honda dealership price. All our policies are genuine, tried and tested and most importantly are all subject to the financial compensation scheme.
We work at great lengths with our insurance underwriters. We are also proud to announce that a number of our policies are currently subject to a range of awards for both cost and quality.
Customers often ask us about the reasons for the significant price difference that exists between ourselves and the Honda dealerships. This is mostly down to the different level of tax we both pay, in that when you buy gap insurance directly from your Honda dealership you are charged Insurance premium tax at 20%. When you buy from independent providers like us, you are charged at the standard rate, which is traditionally lower.
We hope that by using the example of Tracy, and her Honda Civic and what happens when it is written off will assist you with your understanding of how Shortfall Insurance can protect your Honda, but most importantly your finances.
Before you read the examples of Tracy, please consider the following important facts:
An Estimated In the UK each year, 600,000 vehicles are written off.
The average vehicle can depreciate by up to 50% in the first three years, including your Honda.
Your comprehensive insurer will only ever pay you the market value of your Honda at the time it was written off.
Your Shortfall Insurance provider will not reimburse you your Honda's road tax as this can be claimed back from the DVLA.
We expect vehicle prices to increase over time. Naturally this means that if your Honda is written off in say two, three of four years time simply getting back the original invoice price you paid is not a guarantee to be able to buy another vehicle the same as yours originally was, at least not without potentially using some of your savings.
Vehicle Replacement Gap Insurance will take into account any inflationary changes and protect you from any increase in the invoice price you originally paid for your Honda.
The invoice price of your Honda may increase for a number of reasons, for example if Honda introduce an upgraded version of your model, if the government increase VAT or if the cost of certain raw materials increase.
Vehicle Replacement Shortfall Insurance will pay you the difference between the comprehensive insurers settlement figure, which will be the market value of your Honda at the time it was written off or stolen and what you now need to purchase another Honda the same age, mileage and condition as your's originally was when you first drove it out of the show room.
To make things more clear, we have designed a possible real life example to help you understanding of how Vehicle Replacement Shortfall Insurance can protect your Honda and most importantly your finances.
Tracy purchases a Honda Civic for £10,000.
Three years later, she awakes to find that it is no longer on the drive way and is later informed that it has been stolen.
Tracy receives £5,000 from her comprehensive insurer, given that this was the market value of her Honda at the time it was written off.
Without any form of gap insurance the £5,000 is the only amount that Tracy has to be able to replace her Honda and or clear any outstanding finance. ( without using her savings or taking on extra financial commitments). On top of this, Tracy is informed that Honda have introduced an upgraded version of her Civic model. It is new and improved, leaner and meaner and also cost more.
The cost to purchase this upgraded Honda Civic has increased by £2,500 to £12,500.
This means that as a result of her Honda being stolen, Tracy needs to find an additional £7,500 to purchase another Honda.
Vehicle Replacement Shortfall Insurance will pay the difference between Tracy's insurance companies settlement and cost of buying another Honda Civic the same age, mileage and condition and mileage as hers was on the day that she drove it home from the dealership.
How can Return to Invoice protect your Honda?
Return to Invoice is one of the most basic and understandable forms of Shortfall Insurance as well as being one of the most popular on the market.
With Return to Invoice gap insurance it is all in the name, as if in the unfortunate case your Honda is written off or stolen, in cooperation with your comprehensive insurer, Return to Invoice Shortfall Insurance will return you to the original invoice price you paid for your Honda,
If you take into account that the average vehicle can depreciate by up to 50% in the first three years, and fact in the fact that if your Honda is written off that your own motor insurance company are only labile to pay you the value of your Honda on the day it was written off this could be considerably less than what you originally paid for your Honda.
Return to Invoice Gap Insurance will therefore top you back up to the invoice price you originally paid by paying the difference between your Honda's market value at the time it was written off and the original invoice price you paid.
The rational is that after you have been returned back to the original invoice price, as you have the full purchase price back you will then be in the position were you are able to pay off any outstanding balance you may have on your finance agreement or simply be in the position were you have the relevant funds to purchase another Honda, if you so wish.
Please see the below example which we have written in order to deepen your understanding of how Return to Invoice can protect your Honda:
Tracy purchases a Honda Civic for £10,000. Three years later, it is written off as a result of a motoring accident. Tracy receives £5,000 from her comprehensive insurer, given that this was the market value of her Honda at the time it was written off. This means that Tracy only has £5,000 to either pay off any remaining payments in her finance agreement and or to purchase another Honda.
Of course Tracy can use her hard earned savings or extra financial commitments to pay off this outstanding balance or to purchase another Honda, but why should she?
Return to Invoice will pay the difference between Tracy's insurance companies valuation on the day it was written off and the original invoice price she paid. This means that Tracy would receive a second payment of £5,000. She now has the full invoice price back.
An example of a finance agreement is: Hire Purchase, Personal Contract Purchase, Contract Hire or Lease and Lease Purchase.
Did you know that if in the unfortunate case your Honda is written off, you may still be liable for the remaining payments in your finance agreement ultimately paying for a vehicle that you no-longer have.
Even after you receive a settlement payment from your comprehensive insurer, this may not be enough to clear all the outstanding balance.
Finance and Contract Hire Shortfall Insurance will pay your finance company's settlement and your outstanding finance.
Please note that this policy type will not pay any financial penalties which are as a result of a late payment.
Please see the below example which we have designed to assist your understanding:
Tracy takes out a four year finance agreement in order to purchase her Honda. It involves set monthly payments of £250.
Two years later, Tracy awakes to find that her Honda is no longer on the drive way and is later informed that it has been found stolen and burnt out. Tracy has already paid two years of her finance agreement, which totals £6,000 (24 months x £250). After Tracy receives a settlement payment from her comprehensive insurer, there is still £2,000 left outstanding.
Experts in the car industry say that the average vehicle can depreciate, in other words lose half of its original invoice price within the first three years.
To put this into context, your Honda could lose half of its original value by the time it reaches its third birthday, and this is strictly through no fault of your own.
We at Shortfall.co.uk understand that no driver, including yourself, will not want to hear this, given that it is likely that you have just paid a large amount for your Honda, and now you are told, in three years time, potentially half of this amount will have in theory, disappeared.
However, this is the real world and drivers like yourself need to be made aware of this information in order to put into place the relevant defences to prevent their finances from being worst off because of depreciation, if in the unfortunate case your Honda is written off or stolen.
To assist you with your understanding, we have put together a number of examples of Honda depreciation. In these examples, we use figures provided by 'What Car', who use historical and current data to predict what your Honda could be worth in one to four years time.
Example 1 –
Honda Accord Saloon 2.0 i-VTEC EX 4dr
Invoice price you paid - £26,130
Year 1 – £15,129
Year 2 – £12,454
Year 3 – £10,214 – You will see that within the first three years, your Honda Accord has lost £15,916
Year 4 – £8,722 – You will see that within the first four years, your Honda Accord has lost £17,408
Example 2 –
Honda Civic Hatchback 1.8 i-VTEC SE-T 5dr
Invoice price you paid - £19,345
Year 1 – £12,265
Year 2 – £10,094
Year 3 – £8,303 – You will see that within the first three years, your Honda Civic has lost £11,042
Year 4 – £7,065 – You will see that within the first four years, your Honda Civic has lost £12,280
Example 3 –
Honda CR-V 4x4 2.2 i-DTEC SE 5dr
Invoice price you paid - £26,570
Year 1 – £18,958
Year 2 – £15,724
Year 3 – £13,078 – You will see that within the first three years, your Honda CR-V has lost £13,492
Year 4 – £11,324 – You will see that within the first four years, your Honda CR-V has lost £15,246
Example 4 –
Honda CR-Z Coupe 1.5 IMA GT 3dr
Invoice price you paid - £23,275
Year 1 – £13,202
Year 2 – £10,855
Year 3 – £8,912 – You will see that within the first three years, your Honda CR-Z has lost £14,363
Year 4 – £7,623 – You will see that within the first four years, your Honda CR-Z has lost £15,652
Example 5 –
Honda Jazz Hatchback 1.2 i-VTEC S-T A/C 5dr
Invoice price you paid - £13,490
Year 1 – £8,485
Year 2 – £6,991
Year 3 – £5,724 – You will see that within the first three years, your Honda Jazz has lost £7,766
Year 4 – £4,889 – You will see that within the first four years, your Honda Jazz has lost £8,601
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It is the second largest Japanese automobile manufacturer after Toyota and the eight largest of such in the world. The history of Honda dates back to Soichiro Honda, who set up the Tokai Seiki Company in 1937 that manufactured piston rings for motor engines.
The company manufactured engines for Toyota, but lost its contract because of the poor quality of its products. Soichiro, who was determined not to give up, decided to start engineering school that ultimately would earned his company the contract back (even though he never actually graduated from school).
Tokai Seiki quickly became a very successful company and would play a leading role in Japan’s World War Two effort. Soichiro decided to sell the company to Toyota in 1944 and would use the funds to set up the Honda Company that first began to manufacturer motorcycles.
The first Honda motorcycle was introduced in 1948 and was known as the Dream Model. By 1964, the company was the world’s largest motorcycle manufacturer in which it still holds today. The first Honda automobile was introduced in 1963 and was known as the S500 sports car. In 1986, the company set up its own luxury car division that was known as Acura. This was to counter the American dominated luxury car market.
In 1995, the company set up its own aircraft division. It has also invested heavily in the research and production of robots, most notably the ASIMO model. The company is also very active in Formula One car racing and Grand Prix motorcycle racing.
Honda’s automobile portfolio consists of the following successful models: Accord, Civic, Crosstour, CR-V, CR-Z, FCX Clarity, Fit, Insight, Odyssey, Pilot and Ridgeline. Honda’s motorcycle portfolio consists of the following successful models: Touring, Adventure, Cruiser, Supersport, Sport and Dual Sport.