Gap insurance covers you against low payouts from your main car insurance policy by protecting your car from loss of value through depreciation.
With many cars losing up to 50% of their value in the first three years and a substantial chunk just from driving off the garage forecourt, this can secure you big savings if you have to make a claim.
Your car will continue to lose value over its lifespan, and this is something that will be reflected in the payout you receive from your car insurance company if you write your car off or it's stolen. Gap cover insurance works by insuring the difference between the payout from your car insurance and a pre-agreed value placed on your vehicle.
How does Return To Value insurance work?
Return To Value car insurance is available for both new and used cars, meaning everyone can take out this type of cover. The way Return To Value insurance works is as follows: the gap insurance company will assess the value of your car at the time you take our a policy, and use this figure rather than your car's invoice price (the amount you paid for it) as the pre-agreed value of your car. This determines the most you'll receive if you need to make a claim on your gap insurance policy.
Usually RTV insurance is a suitable option if you want the reassurance of gap insurance cover but have missed the deadline for purchasing either Vehicle Replacement Insurance or Return To Invoice insurance; this is usually 3 months or more after buying your car.
Gap insurance return value policies cover you for the shortfall between your main car insurance payout and the agreed value of your car when you took out the policy - rather than the cost you paid for the car.
Example of Return To Value insurance
You buy a car for £8,000; five months later you decide to take out RTV insurance, which values your car at £6,000.
If you write your car off 2 years down the line, you may only receive £3,500 from your main car insurance - their estimate of your car's value at the time of the accident. You would therefore be left with a £2,500 shortfall from your main insurance that you would then be able to claim on your Return To Value gap cover.
How to compare Return To Value GAP insurance
There are a number of factors you need to consider to ensure that the cheapest Return To Value insurance quotes also offer suitable cover.
Most gap insurers offer staggered levels of cover that affect not only the price you pay, but also the most you'll receive if you needed to claim. For example some gap insurance policies will only pay out £5,000 at most, so if you drive an expensive car you should refine your search accordingly so you're fully protected.
Additionally, most gap insurance providers enforce a maximum claim limit on their top policies, usually around £25,000 - so you need to ensure that your gap insurance coverage won't leave you short if your car is more valuable than this.
It is a good idea to shop around and compare Return To Value gap insurance quotes for more than just one or two policies, as each quote will incorporate its own valuation of your car. The higher your car is valued, the more you will be able to claim.
You should always check whether there is a fee for the initial valuation (a slightly lower quote could still prove more expensive once a valuation fee is added on) and the length of the policy offered. The longer your cover is available, the more protection you get against loss of value through depreciation.
Research the make and model of your car to see how well it should hold its value; if your gap insurance policy expires before your car value drops significantly then your insurance could prove unnecessary.
If you compare the best gap insurance quotes based on your priorities, you can make sure that you get cheap Return To Value Insurance that gives you the best cover possible.