Why should you buy Gap Insurance for your Mini?
Gap Insurance is an insurance policy that runs alongside your own motor insurance company and makes sure that if your mini is written off that you do not end up being out of pocket.
After all, as good as our policies are and we genuinely believe them to be some of the UK's most comprehensive if not the most all inclusive in the UK today they can not stop your Mini from being stolen and they certainly can not stop you from being involuved in an accident. What they can do however is make sure that at least the financial worry is taken care of and protect you the only way insurance can, financially.
If in the unfortunate case your Mini is written off, Shortfall Insurance can pay you the difference between your Mini's valuation on the day it is written off and depending on what type of gap protection you opt for, either return you to the original invoice price you paid for your Mini, clear any outstanding finance you may have or pay you the amount of money you need in order to purchase another Mini of the same age, millage and condition as your Mini originally was when you first drove it out of the showroom.
This page has been written with one aim, to ensure that you have a complete understanding of Shortfall Insurance. So that is why we have drawn together three basic, but comprehensive examples of our three most popular policies, Return to Invoice, Vehicle Replacement and Contract Hire/Finance Gap. In these examples, we use Mark and his £15,000 Mini Cooper.
Before you read the examples, please consider the following facts:
In the UK each year, an estimated 600,000 vehicles are written off.
The average vehicle can depreciate by up to 50% in the first three years, including your Mini.
Your comprehensive insurer will only ever pay you the original invoice price you paid for your Mini.
The invoice price of your Mini may increase for a number of reasons, for example: if the government increase VAT, if the cost of certain raw materials increase or if Mini introduce an upgraded version of your model all of which mean that if your Mini is written off simply getting back the invoice price you paid is no longer a guarantee to be able to buy another Mini.
Vehicle Replacement Gap Insurance will pay you the difference between your comprehensive insurer's settlement payment, which will be the market value of your Mini at the time it was written off or stolen and the amount of money you now need to purchase another Mini, the same age, mileage and condition as your Mini originally was when you first drove it out of the show room. If your original model is no longer available, then settlement will be based on the superseding model.
Please see the example of Mark and his Mini and see how Vehicle Replacement Gap Insurance can provide important protection to your finances:
Mark pays £15,000 for his Mini Cooper.
Three years down the line, Mark awakes to find that his Mini is no longer in his driveway and has in fact been stolen.
Mark's comprehensive insurer pays a settlement payment which is based on the market value of his Mini at the time it was written off, which was £7,500.
To make matters worse, Mark not only, no longer has a Mini, but he is also informed that Mini have introduced an upgraded version of his Mini. Better fuel economy, better specification but also increased price. The same equivalent Mini will now cost Mark £20,000 (£5,000 increase).
Without any form of Gap cover, Mark will have no option but to use his own money, maybe his own savings or even take on extra financial commitments in order to purchase another Mini and/or to pay off any outstanding finance he may be liable for.
Vehicle Replacement Shortfall Gap Insurance will pay Mark a settlement payment of £12,500 which along with his comprehensive insurers settlement payment, takes him to £20,000 ( full replacement cost) and allows him now to purchase the new Mini, however, only after any outstanding finance has been paid.
Is Return to Invoice Gap Insurance the best level of cover for your Mini?
Return to Invoice Gap Insurance is designed to pay you the difference between your Mini's valuation on the day it is written off or stolen and the invoice price you originally paid for your Mini. Simple. In essence between your two insurance companies settlement you receive the full invoice price back.
If you are paying for your Mini through a form of finance agreement (for example, personal contract purchase or Hire Purchase), you would have to use this to clear any outstanding finance that you may have and whatever the balance of funds are yours to use as you see fit.
To assist you with your understanding, please see the example of Mark and his Mini Cooper and how his Return to Invoice Gap Insurance performs when he makes a claim:
Mark pays £15,000 for his Mini Cooper.
Three years down the line, he is involved in a car accident that thankfully leaves him and the other driver involved unhurt, but his Mini written off.
Mark's comprehensive insurer pays him the market value of his Mini at the time it was written off, which was £7,500.
Without any form of Gap cover, Mark will have no choice but to use his own savings or even take on extra financial commitments in order to purchase another Mini and or clear any outstanding finance.
Return to Invoice Gap Insurance in this example will pay Mark a second payment of £7,500, so he now has the full purchase price back.
An example of a finance agreement can be: Contract Hire, Lease or Hire Purchase amongst other forms.
Contract Hire Shortfall Gap Insurance can pay you the difference between your Mini's valuation on the day it is written off or stolen (which you will be paid by your comprehensive insurer) and the total outstanding balance you may have on your finance agreement.
Please see the below example of Mark and his Mini and see how Contract Hire Gap Insurance can provide you with important protection:
Mark takes out a three year finance agreement.
Two years down the line, the Mini is written off as a result of a motoring accident, thankfully no-one is hurt but Mark's Mini is written off.
Mark receives a settlement payment from his comprehensive insurer which is based on the market value of his Mini at the time it was written off or stolen.
However, even after this payment has been, there is still £5,000 outstanding on his finance agreement.
Without any form of cover, Mark may have no option to use his own savings to pay off this outstanding amount or worse be left paying for a Mini he no-longer has.
Contract Hire Gap Insurance will pay the finance company involved this outstanding £5,000 which will clear all outstanding finance and allow Mark to walk, yes he has no Mini to use and yes he will have to find a deposit for another but thankfully he is walking away with no further obligation.
Please note that this policy type will not pay any late payment charges which occurred before the Mini was written off.
Motor insurance industry experts claim that the average vehicle can depreciate by up to 50% within the first three years. It is important to stress that every vehicle, no matter if they were built in Germany, France or America will depreciate. To put this into context, there is a high chance that your Mini may lose as much as half of its original invoice price by the time it reaches its third birthday.
We at Shortfall.co.uk understand that no driver whatsoever wants to hear about depreciation, because after all, you will have likely just paid a large amount for your Mini and then told soon after that half of this amount will practically disappear in three years time. However we believe it is important to make you aware of Mini depreciation in order to help you to put into place the relevant protection.
Shortfall Insurance can protect you, your Mini but most importantly your finances against depreciation.
To assist you with your understanding, we have drawn up a number of examples. We have taken figures from 'What Car', who provide historical and current Mini depreciation data and predict what your Mini will be worth in one, two, three or four years time.
Example 1 –
Mini Roadster 1.6T Cooper S 2dr
Invoice price you paid - £20,940
Year 1 – £17,755
Year 2 – £14,775
Year 3 – £12,271 – You will see that within the first three years, your Mini Roadster has lost £8,669
Year 4 – £10,619 – You will see that within the first four years, your Mini Roadster has lost £10,321
Example 2 –
Mini First Hatchback 1.6 3dr
Invoice price you paid - £11,870
Year 1 – £9,372
Year 2 – £7,739
Year 3 – £6,357 – You will see that within the first three years, your Mini First has lost £5,513
Year 4 – £5,151 – You will see that within the first four years, your Mini First has lost £6,719
Example 3 –
Mini Countryman Crossover 1.6 One 2WD 5dr
Invoice price you paid - £16,545
Year 1 – £12,452
Year 2 – £10,322
Year 3 – £8,569 – You will see that within the first three years, your Mini Countryman has lost £7,976
Year 4 – £7,415 – You will see that within the first four years, your Mini Countryman has lost £9,130
Example 4 –
Mini Cooper Clubman 1.6 S 5dr
Invoice price you paid - £19,245
Year 1 – £13,739
Year 2 – £11,739
Year 3 – £9,345 – You will see that within the first three years, your Mini Cooper has lost £9,990
Year 4 – £7,577 – You will see that within the first four years, your Mini Cooper has lost £11,668
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Mini is a British automotive marque, which was founded in 1959. It is currently owned by German automaker, BMW.
The history of Mini dates back to the British Motor Corporation (BMC) in 1959. The concept of the Mini came as a result of the 1956 Suez Crisis that significantly increased the market price of oil. CEO of BMC, Leonard Lord identified the need for a small car in the British market that does not require large amounts of petrol.
Many in the automotive industry claim the model was based on the concept of the successful Volkswagen Beetle. The first model to bear the Mini name was the Mark I in 1959, which was an instant hit. In the same year, the model was seen in over 100 countries. The Mark model was upgraded to Mark II in 1967 and Mark III in 1969. Other successful models include the Cooper and Cooper S that were designed to cater for the sporting market.
In 1966, the company became part of British Leyland. In 1988, it was acquired by British Aerospace and in 1994, it was acquired by BMW. The Mini is the most successful British car, in terms of sales and in 1995, it was awarded the 'Car of the Century' by the respected Autocar magazine. The company's largest markets are America, UK and Germany. To the interest of many, the Mini was actually first refused entry into the American automobile market because it did not fit the requirements for an automobile.
The company is based in Oxford, UK. The Mini has famously been featured in a range of Hollywood blockbusters including: Italian Job, Lara Croft, Mr Bean and Bourne Identity. Mini's portfolio consist of the following successful models: Hatch, Coupe, Roadster, Convertible, Clubman, Clubvan, Countryman, Paceman and the John Cooper Works.