Claim limit is even more important when it comes to vehicle replacement. After all you claim limit has to not only cover the depreciation but also the increase in cost.
Remember the claim limit you chose may also depend on the level of cover you buy.
Let me show you what I mean.
For example lets say you where lucky enough to have bought a £40,000 vehicle. You wisely decided to protect yourself with vehicle replacement insurance and after reading about claim limits you pick a claim limit of £20,000.
Two and a half years later your vehicle is stolen.
You own motor insurance company pay you the market value which based on the rough rule of thumb is approximately 50 less than the invoice price.( the average vehicle can loose up to 50 % within the first three years of its lifetime). This is £20,000.
The cost of replacement your vehicle on a like for like basis has now gone up to £43500.
Your motor insurance send you the cheque for £20,000, Gap Insurance can now only provide you with another £20,000 this means that you for you to buy the same vehicle again o a like for like basis as the day your bought your original vehicle are still £3500 short.
You may think that I am exagerating about prices increasing however think again!
Ford KA 1.3base level petrol
- List Price 2007 £7,995
- List Price 2011 £8,545
- Difference £560
Toyota Avensis 2.0 D Estate base
- List Price 2007 £16,350
- List Price 2011 £20,065
- Difference £3,715
VW Golf GTI 2.0 FSI 3dr Petrol
- List Price 2007 £20,607
- List Price 2011 £25,045
- Difference £4,438
So in brief remember when it comes to claim limits for vehicle replacement insurance you need to factor in not only how much your vehicle will lose but also the increase in cost.
Why not get a vehicle replacement quotation and look at higher limits and make choosing a claim limit as important a consideration as the type of cover you want.