Considering Gap Insurance for vehicles of a high value can be a problem. We all accept that vehicles lose value, but how quickly is another matter entirely. Trying to work out how much a vehicle such as a BMW or an Audi may lose for example, can be quite difficult indeed.
Lets say your Audi is £30,000 brand new, and you want cover for 5 years on a vehicle replacement policy, how do you know what claim limit you should opt for?
Gap Insurance for luxury cars
We have looked at claim limits before, and we have explained that it can be difficult to work out what to do for the best on this subject. Picking a claim limit on VRI Gap Insurance is important as if you get it wrong then you may not have a policy that can act in the way you want it to.
Throughout the history of a manufacturer like Audi, there are examples of vehicles with a high purchase value, that can hold their value reasonably well. However, when considering VRIGap, you also need to factor in how much more it may cost you to replace the vehicle also, with the equivalent model.
So if the vehicle was £30,000, in 5 years time it may be worth £10,000 BUT the replacement model is now £35,000. This means for a VRI Gap Insurance policy to work fully, you would have had to select a £25,000 claim limit.
This means you would have to have bought a £25,000 claim limit on a vehicle that was originally £30,000. This does not immediately look right on paper, but do your sums and you can see the point. Remember that VRI Gap covers both depreciation and inflation, you have to factor both.
Gap Insurance policy
If you have just bought a vehicle like a BMW or Audi, and feel that your Gap Insurance policy is just not adequate for what you need, remember you can cancel any gap insurance policy within the ‘cooling off’ period, and expect a full refund.