How To Decide Which Type Of Gap Insurance To Take Out
As soon as a car is sold its value depreciates – every reason, therefore, to take out gap insurance. There are different types of gap insurance available and it can be confusing figuring out which one would best fit your needs. Should your car be stolen or written off, choosing the appropriate gap insurance will be easier if you understand the different types.
Take note that what your insurer will offer you as compensation for the loss of a car will be the value of the vehicle at the time of its loss. This usually results in your getting a sum which is less than the value of the car. Gap insurance will cover this difference in value.
This type of gap insurance will provide you with the difference between the Invoice Price of the car and its value after car depreciation. The actual price you paid for the car will be given to you by RTI insurance in the event of its being stolen or written off. You can get this type of insurance if you have owned your car for less than three months. Whether you bought the car privately or from a dealer makes no difference.
The Return to Value or RTV gap insurance will pay you the difference of the value of your car when you buy the insurance policy and what the Motor Insurers deem is the depreciated value of the vehicle. There are no limits to the type of car that can be covered by RTV insurance, but it’s limited to a period of seven years after the original purchase of the car. Any vehicle can be covered whether it has been bought with cash or by means of a loan.
VRI- Vehicle Replacement Insurance
Here the insurers make it possible for you to replace your stolen or written off vehicle with a new one. You are paid the difference between what a new vehicle costs and the settlement you received under your Comprehensive Motor Insurance Policy.
When you are shopping for gap insurance you have to be careful to make sure you are getting the correct type of cover. There are dealers who will not be accurate in the way they describe the different types of gap insurance. Thus you might be told that you are buying VRI gap insurance, which would allow you to buy a new vehicle, whereas you are in fact being sold RTI gap insurance, which would pay out only the price on the original invoice. This type of policy would not give you the actual cost it would take to replace your vehicle with a new one.
That is why it is very important that you understand what the exact coverage is for each type of gap insurance. By being knowledgeable you can make sure you are getting what you pay for. The small premium paid for gap insurance is excellent value since it allows you to replace a vehicle that’s been stolen or written off. To have peace of mind for such a relatively small price is surely worthwhile.
When buying any vehicle, it’s wise to consider the effects of car depreciation. Buying insurance from online companies such as Future 45 Ltd. can help UK motorists save money on their gap insurance, for example, by buying direct from the insurer.
What is gap insurance, what does it cover, and when is gap insurance necessary?
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Question by jc_33777: GAP insurance?
ok, I’m wondering how excatly how GAP insurance works. If anybody can help me out with this it would be greatlly appericated.
ok I was in an accident an I’m sure they will say it’s totaled. So it’s worth $ 6,915 per kelly blue book an I owe about $ 10,000 on it, so the GAP would cover the $ 3,000 difference????
Best answer:
Answer by BlueJuliet
Say you owe more on your car than it’s blue book value (happens with zero down loans). You have a wreck. The insurance pays you the value of the car, but you still owe the finance company for the remainder of the loan. Gap insurance pays off the loan for you.
Know better? Leave your own answer in the comments!
(PRWeb UK) December 17, 2010
Research by P&O Cruses has found a 300 per cent increase in ‘grey gap-years’ over the past five years, with many older travellers taking longer, more adventurous holidays(1). Post Office Travel Insurance advises all UK holidaymakers, to ensure they are well prepared by researching and taking out holiday insurance before going away. Post Office Travel Insurance research has revealed that is isn’t always easy for the over 65s to purchase travel insurance, as 14 per cent have found it difficult in the past to purchase adequate travel insurance cover for holidays(2).
Rachel Croft, Post Office head of travel insurance, said: “We understand that finding affordable travel insurance can prove difficult for older travellers and can lead to people having to take out travel insurance policies that impose high costs or heavy stipulations, which is why Post Office Travel Insurance offers a multi-annual travel insurance policy to the over- 65s.
“Post Office Travel Insurance hopes annual multi trip travel insurance will signal the end for seniors to have to buy expensive single trip travel insurance policies every time they go on holiday. Instead they can buy one simple travel insurance policy to cover all their trips for the year.”(3)
(1) Information from P&O press release September 2010: http://www.travelweekly.co.uk/Articles/2010/09/20/34741/grey+gap+years+increasingly+important.html
(2) Information from Post Office News release: Gap Year Gate Crashers September 2009
(3) Quote from Post Office News release: Gap Year Gate Crashers September 2009
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You first need to carry an additional insurance then if anything happens to your vehicle it would be insured 100% you will be reimbursed on a badly wrecked vehicle or if your car was stolen or burned they will give you the fair market value of the vehicle.
GAP insurance is what covers the difference between the balance on your car lease and what your car is worth after an accident and depreciation.
Some years ago, before GAP insurance, if you got your new lease car totaled, you could be libel for thousands because the insurance did not cover the depreciation.
Basically it covers your “drive off” depreciation that your regular insurance does not cover.
GAP insurance pays for the gap between what the car is worth and what you owe.
So, yes, if you had this and your car is worth less than you owe, your insurance would pay off your loan.
It’s a worthy investment if you buy a new car with little money down. Best of luck to you!
Pretty much, you purchase the insurance when you get the policy, not after the wreck. The gap coverage must be written in the policy.
GAP covers the difference between the Actual Cash Value of your vehicle and your loan balance less any late payments and late charges.