It is generally accepted that Return to Invoice and Vehicle Replacement styles of Gap Insurance are the most popular for new vehicles. Return to Invoice Gap will cover between the motor insurers settlement and the original purchase price shown on your sales invoice, whereas Vehicle Replacement will cover the cost to the equivalent replacement vehicle at the time of a claim.
As the costs of vehicles generally increase, in the vast majority of cases it is fair to assume that a replacement vehicle may well be more expensive than the original price you paid for the vehicle. For this reason it could be assumed that Vehicle Replacement Insurance is a more comprehensive style of Gap than Return to Invoice.
Is this always the case? Is Vehicle Replacement Gap always a better choice than Return to Invoice Gap?
When RTI Gap is better than VRI Gap Insurance
The only reason you may consider RTI as a better choice than VRI is simply when it may be that the replacement cost will fall below the original price you paid. There are few occassions where this may happen, but the most common would be where you buy a newly released model. In this situation the manufacturer will normally not provide the normal level of discounts, as a new model attracts enough interest and sales.
However, if we move on a few years, and faced with the situation of having to replace the vehicle, then the cost of this replacement may attract significant discounts that mean the usual assumption of a higher priced replacement may not hold true. With a lower replacement cost then actually the choice of RTI Gap would actually yield a higher settlement to the policy holder.
It must be stressed that these situations may be rare, but it highlights why you must consider your Gap Insurance options carefully when selecting the style of cover initially. RTI may well be cheaper than VRI Gap, but it could offer a higher security in some circumstances.
If you are unsure of your options then speak to a Gap Insurance specialist provider.