Return to Invoice (RTI) Gap Insurance will cover you if the car you have financed is written off or stolen within the term length of the finance agreement, and the insurance pay-out is lower than the amount of finance you have left to pay. The RTI Insurance will then cover the difference between what the insurance company has paid out and the original price you paid for the car on the sales invoice. This difference will also include the deposit that you paid when purchasing the vehicle.
RTI GAP insurance differs from GAP Insurance because RTI will cover you for the difference between the remaining finance and the original sales invoice price of the vehicle.
RTI GAP Insurance can be extremely useful and save you a lot of worry, stress and money if you have taken finance out on a vehicle and then have your vehicle written off or stolen within the term of your finance agreement.
With more than 450,000 accident related write-offs a year in the UK, many drivers find themselves owing money on their finance agreements when the insurance company doesn’t match the price originally paid for the vehicle on the sales invoice.
If the car you have financed is written off or stolen and the insurance pay-out is less than the amount owing on the car and you have no other cover you are responsible for making up the difference with the lender.
RTI GAP Insurance will put your mind at rest knowing that what you paid for the car at the time of purchase is what you will receive back, therefore putting you in the same financial position prior to the claim.
An example of how RTI GAP Insurance works is shown below:
Scenario: After 2 years on the finance agreement above you have paid £8,000 towards your finance, but you write the car off in an accident and your insurance company will only pay out £10,000 (as that is now the current market value of the car - the car has Depreciated by £6,000 during this period). The finance company will require the remaining £12,000 to be settled. This leaves you with a shortfall of £2,000 to make up.
Customer A: Can claim £6,000 on their RTI GAP policy (the difference between the purchase price of the vehicle and the value at the point of the accident). This means you can cover the shortfall, and still have £4,000 to spend on a new vehicle.
Customer B: Can claim £2,000 on their GAP policy which covers the remaining cost of the finance agreement, however they no additional funds towards their next vehicle.
Customer C: Is in the unfortunate position where they will need to pay the £2,000 to ensure they settle the finance.