What do most people go for? RTI or vehicle replacement. This will be the first policy I will be purchasing am I right in assuming on a RTI policy I will get paid the difference between value and the actual invoice price and with the vehicle replacement they will replace the vehicle like for like. I'm assuming with the final option, you have to use your insurance pay out to put towards the replacement vehicle.
I intend to go for vehicle replacement, as I had my car stolen earlier this year and had nothing but problems with the insurance company trying to get it replaced. It was only 4 months old but because of the model change they refused to replace my Mk6 with a Mk7. After a lot of back and forth and involving the ombudsman I got them to order me a Mk7 and I had to meet the difference which wasn't too much thankfully. This time round I'll be getting GAP insurance from the beginning so I won't have the same hassle again.
What will Vehicle Replacement Gap Insurance do for you?
When a write off occurs, fully comprehensive insurers will only pay the market value at the time of write off. For example, in year 3 of ownership an insurer might pay 30 – 35% of the original vehicle purchase price, leaving the owner with an unexpected and unplanned expense.
Vehicle Replacement Gap Insurance will pay the difference between;
a) the insurers claim settlement, which will be the market value at time of write off and,
b) the cost of a replacement vehicle matching the original vehicle specification, age and mileage – even if the cost of doing so is more than the price of the original vehicle.
Vehicle manufacturers generally increase their prices annually at the approximate average rate of 2%. This alone can increase the price of a £25,000.00 vehicle by £2,000.00 over a four year period. Add to this the fact that manufacturers continually develop their ranges and launch upgrades and superceded models, often with better specification and this can similarly add a few thousand more to the cost of replacing with the nearest equivalent model. Harder to calculate is the availability of high discounts. In these difficult economic times dealers and manufacturers are often giving thousands of pounds off the advertised price to attract buyers. Will this be the case if you unexpectedly needed to replace your vehicle in 3 years time? With Vehicle Replacement Gap protection in place, you need not worry about price increases, model succession or reduced discounts and therefore replacing the vehicle will be much more pleasurable and will prevent a financial burden. Vehicle Replacement Gap Insurance is purchased by and suitable for cash buyers and financed buyers alike. Our Vehicle Replacement Gap Insurance policies are ‘combined’ policies which means that if the vehicle is financed via a dealer arranged plan and the lenders finance settlement figure exceeds the original vehicle invoice price, it will pay that higher figure.
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A simple example of how Vehicle Replacement Gap Insurance works
A customer buys a car for £15,000.00.
After three years of ownership, the car is stolen and written off by the insurer.
The insurer agrees to pay the market value at time of write off which is £6,000.00.
The cost of replacing the original vehicle with a model, specification, age and mileage has risen in that two years by £1,500.00
In this example, the customer would need to find £10,500.00 to replace the original car.
Vehicle Replacement Gap Insurance would pay that difference of £10,500.00 directly to the customer to enable him / her to spend £16,500.00 on a replacement.
That was from the Car2Cover website.
