If you are considering a VRI Gap Insurance policy, possibly the most important and possibly confusing aspect of getting your cover, is choosing the right claim limit on the policy. The claim limit on any Gap Insurance policy is the maximum you can use to ‘bridge the gap’ between the vehicle market value and, in the case of VRI Gap Insurance, the cost of the equivalent replacement vehicle. Vehicle Replacement Insurance is possibly the most difficult level of Gap Insurance to determine the Claim Limit for, why?
VRI Gap Insurance Claim Limit
If we look at other types of Gap Insurance, then choosing the claim limit on these is normally quite straightforward. A Finance Gap Insurance claim limit is simply to cover any shortfall between any finance settlement and the vehicle market value. This is unlikely to more than a few thousand pounds at any given point, in most cases.
A Return to Invoice Gap Insurance claim limit is possibly the easiest to consider. This is because you know exactly what you have paid for the vehicle, so you are always looking to return to that figure.
If you have a lease vehicle, then the Contract Hire Gap Insurance claim limit may also be fairly straightforward. If you know what all your rentals add up to, then picking an appropriate claim limit should be easy enough.
When it comes to Vehicle Replacement Insurance, then the claim limit you may want is not always so apparent. However, if you do not take care, chosing the wrong one can mean your VRI Gap Insurance cover may not perform as you want it to.
How to choose a VRI Gap Insurance Claim Limit
Remember with a VRI Gap Insurance policy, you are looking to cover the cost of replacing the vehicle with the equivalent model. So if the replacement model is £4,000 more than you originally paid then a good VRI Gap Insurance policy will look to get you to the replacement cost.
So you are not just factoring in the depreciation on your current car, but also the increased cost in having to replace it.
This means that you could look for a return to invoice and a vehicle replacement policy for the same car, but have to up your claim limit for the VRI Gap Insurance policy to ensure it works correctly.