Why should you buy Gap Insurance for your Skoda?
Depending on what type of cover you opt for, Gap Insurance can either pay you the difference between your Skoda's valuation on the day it is written off or stolen and either, the amount of money you need to be returned back to the original invoice price you paid for your Skoda (Return to Invoice), the amount of money you need to purchase another Skoda of the same age, mileage and condition as yours originally was on the day you originally purchased the vehicle (Vehicle Replacement) or the outstanding finance of which you have remaining on the vehicle (Contract Hire/Finance Gap).
To assist you with your understanding, we have designed three examples of our policies, including Return to Invoice, Vehicle Replacement and Contract Hire/Finance Gap. In these examples we use Carole and her Skoda Octavia.
Before you read the examples, please consider the following facts:
Over 100,000 cars were stolen last year throughout the U.K with under half being recovered.
Another factor to consider would be the fact that 1,600 cars a month are stolen using the keys.
A total of 600,000 cars a year are written off in the UK.
Vehicle Replacement Gap Insurance is designed to not only protect you from any market value depreciation in your vehicles value but also any increase in your Skoda's invoice price. As you may already be aware, car prices continuously rise whilst the value of your own vehicle will be losing value.
Therefore, Vehicle Replacement Gap Insurance will look to protect you from both the depreciation in value of your car and the increase in value of a new one. Vehicle Replacement Gap Insurance at Shortfall will cover the difference between your Skoda's valuation on the day it is written off or stolen and the average cost to purchase another Skoda of the same age, mileage and condition as your Skoda originally was on the day of purchase. If your original model is no longer available, then the replacement cost will be based on any superceeding model.
The invoice price of your Skoda may increase for a number of reasons, for example, during the change of the year into 2013, a whole whost of the worlds largest mass market manufacturers announced a 5% increase on invoice prices due to the constant fluctuation between exchange rates. As a car built in Japan would cost one price and if it were to be sold here in the UK it would cost another and the difference could leave the manufacturer with a smaller profit margin.
Below is a step by step example of Shortfall Vehicle Replacement Gap Insurance for Skoda :
On the 21st of July 2013 Carole pays £20,000 for her Skoda Octavia.
Three years later, Carole returns home from a holiday to an empty Garage.
Carole then reports the car as stolen and a number of days later receives a settlement figure from her comprehensive motor insurer. This figure is likely to be in the region of £10,000.
However, three years later and a total of a 15% increase in the invoice price of the Octavia, a new Octavia would cost Carole £22,876.
As Carole has only received a £10,000 settlement from her comprehensive motor insurer, she could be left owing thousands in outstanding finance or be left with the inability to purchase a new Octavia. However, with a Vehicle Replacement Gap Insurance policy from us here at Shortfall, along with her Comprehensive motor insurance settlement, Carole was awarded the full replacement cost of £22,876.
In this case Carole paid for the Octavia through the form of a cash payment rather than having any finance, however, if Carole did purchase the car through the form of a financial agreement then all outstanding finance would be cleared and the full deposit, balance and equity is hers to do with what she pleases.
The above example has been constructed to aid your understanding of how both the depreciation in the market value of your vehicle and the possible increase in the invoice price of your Skoda model. So, why not protect your Skoda with a Shortfall Vehicle Replacement Gap Insurance policy today.
Is Return to Invoice Shortfall Gap Insurance the best level of cover for your Skoda?
It is more than likely that the first time you will have heard about Gap Insurance will have been within your dealership and it is also highly likely that you will have been offered a form of Return to Invoice Gap Insurance. Return to Invoice Gap Insurance is said to be the most popular form of Gap Insurance due to the level of exposure the cover receives within the dealership network across the country.
Return to Invoice Gap Insurance will, put simply, cover the financial shortfall that is the difference between the market value of your vehicle on the day it was written off or stolen and the original invoice price of which you paid for your Skoda. This will give you the ability to clear any outstanding finance you have on the vehicle and the full balance, deposit and equity is yours to do with what you please.
Please see the below example of how Return to Invoice Gap Insurance works :
Carole has purchased a brand new Skoda Octavia for a tidy price of £20,000.
Three years later, Carole is involved in an unfortunate accident which results in the Octavia being written off.
Several days later Carole then receives a settlement figure of £10,000 which is the estimated market value of the Skoda Octavia.
As you can see, Carole has received a settlement which is at a fraction of the price of which she paid for her Skoda Octavia and could possibly have left her owing thousands of pounds in outstanding finance. However, as Carole had a Return to Invoice Gap Insurance policy, between both insurers she received the full invoice price of which she paid for the vehicle. This will give Carole piece of mind as her outstanding finance was cleared and she received the full balance, deposit and equity to do with what she pleases.
Why should you buy Finance and Contract Hire Gap Insurance for your Skoda?
Finance and Contract Hire Gap Insurance is designed for those who have purchased their Skoda model through the form of financial agreement and only wish to protect any outstanding finance in the event of the vehicle being written off or stolen. As you may have seen in the previous examples of Gap Insurance, due to market value depreciation you could be left owing thousands of pounds to the finance company although the vehicle has been written off.
Finance and Contract Hire Gap Insurance will cover the difference between the market value of your vehicle on the day it was written off and the outstanding finance you have remaining on your Skoda model. However, if you have a deposit as well as the finance to protect then a higher level of cover may be more ideal for you and your Skoda.
Please see the example below on how Shortfall Finance and Contract Hire Gap Insurance works:
Carole purchases a brand new Skoda Octavia for £20,000 and places £500 deposit on the vehicle and finances the remaining £19,500 over a five year period. Two years later, Carole awakes to see that her Skoda has been stolen. After reporting the vehicle as being stolen, several days later Carole receives a settlement figure of £10,000. However, this along with two years already paid off and a £500 deposit leaves a financial shortfall of £2,150.
Carole would have had to clear the £2,150 herself if she didn't have Finance and Contract Hire Gap Insurance policy. However, she had taken out a Finance and Contract Hire Gap Insurance policy with Shortfall and after the vehicle was written off, her policy covered the difference between the market value of your vehicle on the day it was written off and the outstanding finance.
This gave Carole the ability to walk away from the Skoda model without any financial strings or attachments. However, as you may have noticed, Finance and Contract Hire Gap Insurance does not cover any level of deposit placed on the vehicle and if Carole wished to protect any finance then a higher level of cover would have been more appropriate.
Industry experts claim that the average vehicle can depreciate by up to 50% within the first three years. To put this into context of your Skoda, it is very likely that it will lose as much as 50% by the time it reaches its third birthday.
We at Shortfall understand that no Skoda owner would like to hear about how much your Skoda model will depreciate in value, after all, you will have just likely paid a large amount for your Skoda then told soon after that half of this amount will practically disappear in three years time. However, we believe that it is important to make you aware of Skoda depreciation in order to for you to make the right decisions about protecting your Skoda with Shortfall Gap Insurance.
On this page we have put together a number of examples of Skoda depreciation. In these examples we have taken figures from 'What Car', who provide historical and current Skoda deprecation data in order to predict what you Skoda can be worth in one to four years time.
Example 1 –
Skoda Yeti Crossover 1.4 TSI S 2WD 5dr
Invoice price you paid - £16,540
Year 1 – £9,979
Year 2 – £8,202
Year 3 – £6,727 – You will see that within the first three years, your Yeti model has lost £9,813
Year 4 – £5,751 – You will see that within the first four years, your Yeti model has lost £10,789
Example 2 –
Skoda Rapid Hatchback 1.2 TSI 85 SE 5dr
Invoice price you paid - £14,650
Year 1 – £8,400
Year 2 – £6,900
Year 3 – £5,675 – You will see that within the first three years, your Rapid model has lost £8,975
Year 4 – £4,851 – You will see that within the first four years, your Rapid model has lost £9,799
Example 3 –
Skoda Fabia Estate 1.6 TDI CR 75 S 5dr
Invoice price you paid - £12,645
Year 1 – £8,499
Year 2 – £6,900
Year 3 – £5,675 – You will see that within the first three years, your Fabia model has lost £6,970
Year 4 – £4,851 – You will see that within the first four years, your Fabia model has lost £7,794
Example 4 –
Skoda Clitigo Hatchback 1.0 60 Greentech Elegance 5dr
Invoice price you paid - £10,070
Year 1 – £6,508
Year 2 – £5,348
Year 3 – £4,390 – You will see that within the first three years, your Clitigo model has lost £5,680
Year 4 – £3,758 – You will see that within the first four years, your Clitigo model has lost £6,312
Example 5 –
Skoda Roomster MPV 1.2 TSI 105 S auto 5dr
Invoice price you paid - £14,050
Year 1 – £6,653
Year 2 – £5,451
Year 3 – £4,502 – You will see that within the first three years, your Roomser model has lost £9,548
Year 4 – £3,826 – You will see that within the first four years, your Roomster model has lost £10,224
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Skoda is an automobile company founded in 1895 by two friends Laurin and Klement in Czech Republic. The company is now a subsidiary of German based, Volkswagen which is the world’s third largest automobile company. The company holds an amusing, interesting history. Situated in Austria-Hungary at the time, the company first began manufacturing bicycles.
In 1894, Vaclav Klement, an adventurous bookseller was finding it difficult to locate spare parts to repair his bicycle. Klement decided to write to his bicycles manufacturer, German based Seidel and Naumann asking for assistance in finding the spare parts. However to the surprise of Klement, he received a reply saying "If you would like an answer to your inquiry, you should try writing in a language we can understand”.
A determined Klement, in partnership with his friend Laurin decided to open a bicycle repair shop in 1895. The company later expanded into the motorcycle market and by the start of the 20th century, the company was a well-established company as it began manufacturing its first car, the Voiturette A. During the First World War the company decided to diverse into other markets and began producing trucks, buses and even aeroplane engines.
However as a result of poor economic conditions in Czechoslovakia and also a fire in one of its main manufacturing facilities, Klement and Laurin began experiencing financial difficulties and searched for a partner for investment. In 1925, it merged with Pizen Skodovka Co and became Skoda.
In the 1930's, the company introduced its most successful model, the Type A Skoda Popular. The Octavia model, again one of its other most successful models was also introduced in the 1980's. In 1990, during the fall of the communist Eastern Bloc, the now Czechoslovakia government decided to privatised Skoda and sell it to the German automaker Volkswagen. The current Skoda portfolio consists of successful models such as: Citigo, Fabia, Roomster, Rapid, Octavia, Superb and Yeti.