What exactly is Vehicle Replacement Insurance and why do I need it?

The world of gap insurance can be very confusing - with so many different options available it can be difficult to know which policy is right for you. In the event of the worst case scenario coming to pass - that is, an insurance "write-off" - would you want to replace your car with the same model? If the answer is yes, then Vehicle Replacement Gap Insurance Cover (often known simply as VRI) could be the answer to your prayers.

What is Vehicle Replacement Insurance?

Vehicle Replacement Insurance allows you to replace your vehicle with a new car of the same or similar specification in the event your original car is an insurance write-off or of similar age if your car was not new when you bought it.

Why do I need Vehicle Replacement Insurance?

Should you be unfortunate enough to have your vehicle written off due to an accident, theft or mindless vandalism you will only receive the current vehicle value for your car from regular car insurance. Bear in mind that your car loses value the moment you drive it off the car dealership and can lose up to 70% of its original value within three years, that's a lot of money to be out of pocket if you are buying on credit.

Vehicle replacement gap insurance allows you to replace your write-off with another new car of equal or similar specification. If your car was not new when you bought it, you will be able to get a car of equal cost or similar specification to the one that was written off.

When insurance companies pay out on normal car insurance typically only pay the loss value, i.e. the value at the time of loss and not the invoice value. Vehicle replacement insurance ensures you get full value on the write-off to put forward on a replacement vehicle.

How does Vehicle Replacement Insurance work?

When you lose your vehicle as a write-off, your vehicle replacement insurance will the depreciation value PLUS the difference between the original invoice value and the price you would need to pay for a brand new replacement vehicle. Some replacement insurances will supply the new car or you can choose to take the money to spend on your choice of replacement vehicle.

This type of insurance is available for all vehicles, business or privately owned, whether they are financed through a loan or you own the vehicle outright. Typically vehicles are less than 5 years old and replacement insurance cover would be available for up to 4 years from the date you took delivery of the vehicle.

Is vehicle replacement insurance worth it?

The simple answer is yes. When you buy a new car, not only does it cost a lot, but you are also proud of it, it's your pride and joy and to see it written off in an accident, irrespective of whose fault it was, or to be stolen or vandalized beyond repair is not only heart wrenching, you lose a lot of hard earned cash.

The value on return far outweighs the slightly higher premium. The difference between the invoice price on your new car and the depreciation value at the time of write-off can be significant.

With a regular car insurance policy, the finance company will get their money first - even if you have to continue paying them!! Any money you personally paid into the car could be lost. Vehicle replacement insurance ensures that everyone gets their money back and you get a new car. If you own a new or relatively new car, get covered with VRI insurance now available from WhatCar? and Click4Gap.