Home » Vehicle replacement car gap insurance

Vehicle replacement car gap insurance

Our vehicle replacement gap insurance is available for both new and used cars, and commercial trucks and vans. The vehicle replacement gap insurance policies are suitable for both the private individual and for companies and the vehicles can be up to 8 years old. Additionally, cover is available for up to 4 years from the date that you took delivery of the vehicle.

As you may have seen elsewhere on the site, your motor insurer will only pay you what they perceive the current market value of the vehicle to be - this is known as the depreciated value, or book value, of the vehicle when making their settlement of your claim. You will find that this will be substantially less than the price you originally paid for the vehicle. With vehicle replacement gap insurance your insurer will pay a nominated dealer their settlement on your vehicle and your vehicle replacement gap insurance policy will pay the dealer the difference - the gap - or shortfall, of the cost of replacing the vehicle with a new vehicle of the same or similar specification as the original or a replacement vehicle of similar age if the vehicle was not new when originally purchased.

Let's take another example:

Original cost of your vehicle£20,000
Your Deposit:£2,000
Finance Amount:£18,000
After 18 months the vehicle is declared a total loss through accident, fire or theft
Amount owing to your finance house£12,000
Your insurer's settlement £9,000

A vehicle replacement gap insurance policy from us will pay to your nominated dealer the difference between the £9,000 which your insurer pays and the cost of buying a new car - thus saving you from funding the shortfall yourself.

As you will see from the example above, the settlement which you receive from your insurers will more than likely be insufficient to buy a replacement vehicle, and will also probably leave you owing money to your finance company for a vehicle which has been written off. A vehicle replacement gap car insurance policy (or a vehicle replacement gap commercial vehicle insurance policy) will cover the gap or shortfall between your insurance company's depreciated valuation of your vehicle and what it would cost to purchase another.