Another GAP Insurance Question

RemedyMooCow

I’m potentially buying a used car for £60k and putting a £20k deposit down and financing the balance. I’m looking at combined RTI Gap insurance. I believe that in the event of a total loss, it will pay the difference between the insurance company's settlement and the higher of either. The outstanding finance. The original invoice price I paid but what happens to the £20k deposit? Do I get that back too ?

DullGreyGuy

RemedyMooCow said:

I’m potentially buying a used car for £60k and putting a £20k deposit down and financing the balance. I’m looking at combined RTI Gap insurance. I believe that in the event of a total loss, it will pay the difference between the insurance company's settlement and the higher of either. The outstanding finance. The original invoice price I paid but what happens to the £20k deposit? Do I get that back too ?

The invoice price is £60k irrespective if you paid £2, £20,000 or £59,000 deposit so, subject to any excluded items like VED, you get back whatever total loss settlement from your insurers and a balancing item to get it back to £60k (assuming no exclusions).

The "issue" with RTI is that you dont know how the secondhand car prices may have moved in-between you buying the car and you writing it off. During covid they spiked and so whilst you got your £60k back that was no longer enough to buy a replacement vehicle. This is where RV GAP can come in but then had you bought the car during covid then RTI would have been better because prices have reduced since then and so the monies would have left you with a surplus. 

The higher the deposit you pay the more likely you will be claiming on the RTI or RV aspect than the Financial GAP. 

Worth also reading exactly what "gap" they pay, some bottom of the barrel providers used to pay the difference between their total loss valuation and the invoice rather than your motor insurer's, inevitably the GAP insurers were more optimistic on what your now wreck was worth. 

DrEskimo

Yes, the original invoice amount is £60k.