‘Return to Invoice’: best all-round, especially for premium/performance cars
A ‘Return to Invoice’ (or ‘Back to Invoice’) policy is generally the best all-round option for drivers purchasing a brand-new car outright. It will top up the insurer’s payout to the original price of the car or the cost of any outstanding finance payments, whichever is greater.
But, even if the dealer offers you ‘Return to Invoice’ GAP insurance, it’s still worth shopping around for a cheaper deal or one with better bespoke cover. “You can make it very vehicle specific,” Jason explains. Premium or performance cars cost more than mass-market city cars, hatchbacks and family SUVs when new, for example, but will often suffer from higher rates of depreciation. Therefore, ‘Return to Invoice’ can be very beneficial to those driving more expensive cars like these.
‘Vehicle replacement’: finance buyers with a discounted deal
The 80% of drivers who buy a new car on a finance plan will invariably benefit from some form of deal or offer – such as a manufacturer or dealer deposit contribution – that will reduce the purchase price of the car significantly. This is where ‘Vehicle Replacement’ GAP Insurance can offer an additional benefit over ‘Return to Invoice’.
“Because the prices of new cars increase over time, replacing a car in the future will cost more,” says Jason. “‘Vehicle Replacement’ cover protects the full replacement price of another brand-new car.” By comparison, ‘Return to Invoice’ only bridges the gap to the discounted price – meaning that if the same offers are not available at the time of vehicle loss, the shortfall to replace the car would not be fully covered.
‘Contract Hire’: drivers leasing, with no option to purchase
‘Contract Hire’ GAP insurance is directly aimed at those on a leasing plan, but with no option to purchase the car. It will cover the cost of any outstanding finance payments if the car is a total loss, therefore relieving the customer of that payment liability.
“Drivers in this situation could be liable for up to 100% of the outstanding finance on that car,” Jason explains. “On a typical three-year lease deal, if something happens after a year, they could still end up owing 24 monthly payments. ‘Contract Hire’ GAP insurance will cover that, meaning they can move on to getting a replacement car.”