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Why could Vehicle Replacement Insurance be the best option for you?

You have picked your car; now it's time to pick your gap insurance.

Is vehicle replacement gap insurance the best choice for you?

Vehicle replacement is unlike any other form of gap insurance. Instead of simply protecting a fixed amount such as the invoice price you paid or even the amount you borrowed, you are protecting a standard of a vehicle. Model upgrades, technological advances, VAT changes, labour and raw material costs, mean that if you wanted to replace your vehicle with another, it could cost more.

Vehicle Replacement pays the higher of either...

1. Your insurance company's settlement and the amount outstanding on your finance agreement which is attached to the purchase of your car. 

2. Your insurance company's settlement and the original invoice price you paid. (on the road after any discount and before you paid any deposit or part exchange)

3. Your insurance company's settlement and the replacement cost of another vehicle the same as yours was on the 1st day you drove home. 

Vehicle Replacement Example

To completely understand vehicle replacement, it is far easier to look at an example.

For illustration purposes, let's say you have just bought a car. 

You have bought it within 90 days of it being registered and you are the first and only registered keeper.

You negotiated a good deal and paid just £40,185, which is a massive £5,815 less than a standard vehicle.

Your car is written off three years later and your insurance company offers you the market value.

Based on average usage and mileage, this is estimated to be in the region of £21,000.

Without any form of gap insurance and without using your savings, £21,000 is the only amount that you would have to be able to replace your car.

To compound the issue to buy another car the same as yours was, the same factory-fitted options and same mileage is now £48,000.

In this example, the replacement cost is the highest, so your vehicle replacement insurance policy would pay the difference between your vehicle's valuation and the replacement cost of £48,000.

This means that between your motor insurance policy and your Gap Insurance policy, you now have the full replacement cost. From this, you can clear any finance if needs be, and the balance of the funds, the deposit you paid, and the equity you generated is yours to do with as you see fit.

Remember that we never replace your vehicle for you; all claims are made in cash settlement.

Are Claim Limits Important?

A Claim limit is a maximum amount you will ever be able to claim from your gap insurance policy. No matter how long it is for, how much you paid, or how much the replacement vehicle is.

As you can see, the claim limit is therefore very important. There is no exact science to picking a vehicle replacement claim limit. To simplify our policies if your vehicle costs less than £50,000, there is no claim limit. Instead, it is unlimited. 

If your vehicle is over £50,000, the claim limit is set at a maximum of £50,000.

No one can ever categorically state how much a vehicle will be worth at the end of a set period of time with a set mileage on it.

After all, there are too many factors to take into consideration. Public opinion, model upgrades, labour costs and taxation rates can all affect your vehicle's cost. 

Notwithstanding, motor experts predict that the average vehicle with average usage can lose up to 50% within three years and, for some models, even more.

For example, for illustration purposes only - you buy a vehicle for £98,750, and your vehicle is written off three years later.

The market value is now £49375. To replace your vehicle now costs £107,825. In this example, your settlement would be capped at £50,000, while being a significate amount of money this would still leave a shortfall of £8450. 

We say this not to be derogatory about our policies; far from it, we think they are amazing. But we want ALL customers to understand our policies' advantages and disadvantages before buying any Gap insurance Policy.

Terms to look out for when comparing Vehicle Replacement Policies.

Every insurance policy will have the famous 'small print'. These are the terms and conditions of a policy and are what can make it quite different from another that may even bear the same basic description.

Some clauses may reduce the settlement or liability of the Gap Insurer in case of a claim.

A 'reduced liability' Clause suggests that the Gap Insurers' liability to you may be reduced for any reason. These can be found in VRI products in the market for a number of reasons. For example, you may have purchased the Gap Insurance several days after the vehicle purchase; some policies may reduce the cover for any deemed depreciation in that period. Some products may be less specific and say they may reduce liability if you fail to get a full settlement from your motor insurer. The good news is we don't have one.

The 'market value' clause is found in many products and means that your Gap Insurance policy will pay from a specified value. Usually, the Glass Guide Retail Value, at the time of total loss, and not specifically the motor insurers settlement. 

This is an interesting one for us as two other leading brands we operate, Easy Gap and GapInsurance123; both have this Clause in the policy terms. In practice, within the claims process we use, whereby our claims team negotiates directly with your motor insurer, there has never been any occasion where any claim we process has resulted in a 'gap' between the motor insurers' settlement and the Gap Insurance settlement.

We do understand that some consumers may be concerned that your motor insurer would not pay the Glass' Guide Retail Value for the replacement cost. So we have some good news when you buy a Shortfall.co.uk policy, as all our Gap Insurance products do not have a 'market value' clause.

Return to Invoice vs Vehicle Replacement Insurance

Why is this different from, say, Return to Invoice? 

Because the replacement car's cost may be higher, perhaps thousands of pounds higher, than the original price you paid. Model upgrades, inflation, raw material costs, and model changes can affect replacement costs. If you have managed to source a 'bargain-priced" deal, then you may not be able to get the same deal again. If you take Return to Invoice, simply being paid the original invoice price could leave you short of covering the cost of replacing with the same standard of vehicle again.

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When Can you Buy Vehicle Replacement Insurance?

You can buy Vehicle Replacement up to 90 days after you have taken delivery of your vehicle and up to 30 days before you take delivery.

You must have purchased your vehicle from a VAT-registered garage or main dealership.

You must have paid cash or used a financial package, meaning you have the legal right to take full ownership at the end of your agreement.

Vehicle Replacement Insurance is available from one to four years.

If the vehicle you have bought is no longer available, then settlement will be based on the superseding model.

Your vehicle must have less than 40,000 miles on the clock when you buy your policy.

Your vehicle must be less than four years old on the day of inception.

Please remember that for us, our sole priority will always be your policy terms, conditions and what happens when you need to make a claim. We believe that gap insurance should be as easy to buy as it is to make a claim which we think is the only true real test of any policy.

Your vehicle must also be listed in Glass' guide and UK supplied.

Please see your full policy documents for complete policy terms and conditions.

Compare VRI Prices & Cover

Suppose your local dealership has just quoted you for their level of gap insurance, then looking at our prices can seem as though it is too good to be true or that they are possibly missing something. 

We completely understand. After all, with a price difference up to 90% less than main dealerships and 50% less than some other online gap insurance providers, the question has to be asked, what is the difference?

There are real tangible differences and they are absolutely nothing to do with policy features, support or backup. They also have nothing to do with levels of customer service or claims handling. This is due to;

1. Differences in Insurance Premium Tax are lower when you buy independently.

2. Our buying power means we can negotiate better supplier rates. 

3. No commission-based pay structures; instead, any bonuses paid are based on quality customer service rates, which we consider the only real barometer.

We genuinely believe the price you pay is not a reflection of the level of cover; instead, it is simply an indication of where you have bought it from. 

Can you buy vehicle replacement at a fraction of the cost of main dealerships and some other Internet providers? Yes, the price you have paid bears no connection to the level of cover you have bought. Instead, it merely reflects where you have purchased it from.

Not all Gap Insurance is the Same 

No matter how good our policies are, they can not stop your vehicle from being stolen and they certainly can not stop your vehicle from being involved in an accident.

Instead, our policies are designed to protect you the only way insurance can, financially, and we are here to support you every step of the way.

In the event of a claim;

We pay £250 towards your own motor insurance excess. (unless covered by a 3rd party)

We cover the cost of all Factory fitted Options.

You have a 30-day cooling-off period, during which time if you cancel and prove you have not attempted to make a claim, you are entitled to a full refund.

You can transfer the terms of your original cover, completely free of charge, to another eligible vehicle. (terms & conditions apply)

We do not charge extra for paying with a credit or debit card.

You can cancel at any time and receive a pro-rata refund. (terms & conditions apply)

We pay you any funds and not a nominated or pet dealership.

The list goes on and on. However, we hope you are starting to appreciate that real value for money Vehicle Replacement Insurance does not mean a dilution in policy features support or backup.