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What is Gap Insurance?


If you have recently bought a new car from your dealer, then they may have told you about Gap Insurance. It is basically a type of insurance which runs alongside your own comprehensive motor insurance and keeps you from being out of pocket if anything were to happen to your vehicle.


Over time your vehicle will depreciate in value and if your vehicle was ever stolen or in an accident your motor insurer is likely to only ever pay you the value of the vehicle at the time it is written off. This value is usually thousands less than what you originally paid. This is where Gap Insurance would come into play.


There are several types of Gap Insurance available for you to consider and each do slightly different things, though it is likely your motor dealer only ever explained the one type. There are four main types of Gap Insurance available; Return to Invoice, Vehicle Replacement, Finance Gap and Agreed Value Gap. Below is a basic and brief description of what each level of cover can do for you. If you want to find out more follow the links to the official policy pages.


Return to Invoice Gap Insurance


This type of Gap Insurance is also known as RTI Gap Insurance and is usually the type offered by your motor dealer. This works protecting from your motor insurance settlement to the invoice price of your vehicle when you purchased it. This is suitable if you recently bought your car with cash from your dealer.


Vehicle Replacement Gap Insurance


Vehicle Replacement or VRI Gap Insurance works by protecting from the motor insurance settlement to the cost of an equivalent vehicle. If the vehicle is new, then the policy will replace to the cost of the an equivalent new vehicle or the superseding model. If the vehicle was a year old, then the replacement would be a one year old equivalent. This type of Gap Insurance is more suitable if you recently bought your vehicle on a discount, if you ever need to claim that discount may not be offered anymore.


Finance Gap Insurance


This form of Gap Insurance is ideal for those who purchased their vehicle on some form of finance such as a PCP agreement. It works by protecting from the motor insurance settlement to the amount outstanding on finance. This policy can be taken out at any time of your vehicle ownership.


Agreed Value Gap Insurance


On the day a policy is bought, a value is agreed upon which is based on the Glass' Guide Retail Value of the vehicle on the day of policy purchase. This value is what you are protecting. As such, if you ever needed to make a claim, the Gap Insurance would cover from the motor insurance settlement to the Agreed Value on your policy. This Gap protection is very much similar to that of Return to Invoice.


We hope that these explanations help you if you were looking for more information or if you ever need to buy a Gap Insurance policy in the future. If you wish to find out more specific information on each level of cover then please follow the links to the corresponding pages.