For example, if you paid £25,000 for your car, but its value at the time of being written off was only £15,000, your Vehicle Replacement Gap Insurance would cover the £10,000 difference between that original purchase price and the settlement you received from your motor insurer. Additionally, if the value of your replacement vehicle had gone up from the original purchase price, your gap insurance policy would deliver a payout to reflect that.
Alternatively, let’s assume you bought your car on a finance deal for £25,000 and, at the time of being written off, you owed £17,000. Your vehicle replacement gap policy would ensure the finance company received their money, while you would keep the remaining £8,000. In cases where the outstanding balance was greater than the cost of a replacement car, this policy would cover the difference between the vehicle’s value when it was written off and the amount left outstanding on the finance agreement.
Furthermore, your cover will include up to a maximum of £250 motor insurance excess.