As soon as a car is sold its value depreciates - every reason, therefore, to take out gap insurance. There are different types of gap insurance available and it can be confusing figuring out which one would best fit your needs. Should your car be stolen or written off, choosing the appropriate gap insurance will be easier if you understand the different types.

Take note that what your insurer will offer you as compensation for the loss of a car will be the value of the vehicle at the time of its loss. This usually results in your getting a sum which is less than the value of the car. Gap insurance will cover this difference in value.

RTI- Return To Invoice

This type of gap insurance will provide you with the difference between the Invoice Price of the car and its value after car depreciation. The actual price you paid for the car will be given to you by RTI insurance in the event of its being stolen or written off. You can get this type of insurance if you have owned your car for less than three months. Whether you bought the car privately or from a dealer makes no difference.

RTV- Return to Value

The Return to Value or RTV gap insurance will pay you the difference of the value of your car when you buy the insurance policy and what the Motor Insurers deem is the depreciated value of the vehicle. There are no limits to the type of car that can be covered by RTV insurance, but it's limited to a period of seven years after the original purchase of the car. Any vehicle can be covered whether it has been bought with cash or by means of a loan.

VRI- Vehicle Replacement Insurance

Here the insurers make it possible for you to replace your stolen or written off vehicle with a new one. You are paid the difference between what a new vehicle costs and the settlement you received under your Comprehensive Motor Insurance Policy.

When you are shopping for gap insurance you have to be careful to make sure you are getting the correct type of cover. There are dealers who will not be accurate in the way they describe the different types of gap insurance. Thus you might be told that you are buying VRI gap insurance, which would allow you to buy a new vehicle, whereas you are in fact being sold RTI gap insurance, which would pay out only the price on the original invoice. This type of policy would not give you the actual cost it would take to replace your vehicle with a new one.

That is why it is very important that you understand what the exact coverage is for each type of gap insurance. By being knowledgeable you can make sure you are getting what you pay for. The small premium paid for gap insurance is excellent value since it allows you to replace a vehicle that's been stolen or written off. To have peace of mind for such a relatively small price is surely worthwhile.