The two most popular forms of Gap Insurance are Return to Invoice (RTI) and Vehicle Replacement (VRI).
Return to Invoice Gap Insurance in the most simplest terms, protects the invoice price you paid for your vehicle. For illustrational purposes, let's look at the case of Donald and his Vauxhall Corsa, which he paid an invoice price of £20,000 for. Three years down the line, Donald was involved in a motoring accident which thankfully left him unhurt but unfortunately wrote off his Vauxhall. Donald received £10,000 from his comprehensive insurer as this was the market value of the Vauxhall at the time of the accident. The majority of UK drivers are simple not aware of the disastrous deprecation rates. Industry experts say that the average vehicle loses up to 50% of its value within the first three years. Donald is in theory, £10,000 out of pocket. He treated his Vauxhall like it was his own child, it was in immaculate condition, and had done very few miles at the time it was written off. The motoring accident was not even Donald's fault. However this is irrelevant. Car deprecation rates are a killer and no car is immune to them. This is where Return to Invoice comes into it the situation. Gap Insurance acts as a top up insurer and in basic terms fills in the gaps which the comprehensive insurer created. So in this case, Return to Invoice would pay Donald the remaining £10,000 shortfall. Donald in now in the position to buy another Vauxhall Corsa if he so wishes or any other vehicle of his choice.
Vehicle Replacement Gap Insurance is the same as Return to Invoice, apart from one different feature. It in theory places the driver in a position to replace the vehicle if needed. If we turn to the illustration of Donald. Return to Invoice Gap Insurance paid Donald £10,000 which in theory, returned him to the original invoice price he paid three years ago. However, in some cases (not all) Donald could visit his local Vauxhall dealer and find out that the invoice price he originally paid for his Vauxhall Corsa has increased by £5,000 to £25,000. Donald is now £5,000 down, and as explained before, through no fault of his own. An increase of a vehicle's invoice price can be down for a range of reasons such as, the cost of raw materials, for example a war breaks out in the Middle East which forces the price of oil to dramatically rise. Either way, Donald is unable to purchase a Vauxhall Corsa. Vehicle Replacement would in this case, pay Donald the outstanding cost needed to purchase a vehicle of the same age, mileage and condition as it was when he originally purchased his vehicle three years ago. So in this case, Vehicle Replacement would pay Donald 15,000, given the £10,000 he has received from his comprehensive insurer.
Jackie Verdier Sales Director at Aequitas Automotive Limited
Aequitas Automotive Limited's aim is simply to be fair and honest in all we do. No gimmicks, no fuss just fantastic service and real market leading prices via our two brands EasyGap Insurance - Gap Insurance 1-2-3.
Article Source: http://EzineArticles.com/?expert=Jackie_Verdier
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