RTI Gap insurance

Definition

If your vehicle is stolen or written off in an accident, Return To Invoice (RTI) Gap insurance covers the shortfall between the vehicle’s total loss value and the original purchase price of the vehicle. 

RTI Gap is particularly popular among car finance customers, as it protects you from having to pay monthly instalments for a car that you can no longer drive.

How does RTI Gap work?

Imagine you get a brand-new car on finance, but within 6 months you have an accident and the car is written off.

Your standard insurance policy will only cover the value of the car at the time of the accident, so you won’t be able to claim back the original purchase price of the vehicle.

Typically, a brand-new car depreciates by 15%-35% in the first year, so this could leave you with a shortfall of thousands, and stuck paying a loan for a car that you can no longer drive.

With RTI GAP insurance you have protection and peace of mind, as the shortfall between your insurance payout, and the price you originally paid for the vehicle is covered.

So if your vehicle is written off, you can pay off any outstanding finance and settle your agreement early, and the remaining funds can be put towards your next car.

RTI Gap insurance example

To explain RTI Gap insurance in more detail, let’s take an example.

Simon has a 36-month car finance agreement for a brand-new Audi A3. The purchase price of his vehicle was £26,000, and his total amount payable with interest, is £29,510.

After 1 year, Simon has repaid £9,840, but unfortunately his A3 is written-off in an accident.

The car has Depreciated by 35% and his insurance provider will only payout the car’s current market value of £16,900.

He also still owes the finance provider £19,670, and without RTI Gap this leaves Simon with a shortfall of £2,770.

If Simon had RTI Gap insurance, he could have claimed back the original price on the invoice (£26,000).

This would enable him to settle his outstanding finance of £19,670 and use the remaining £6,330 towards his next car.

Should I get RTI Gap insurance?

RTI Gap insurance not only gives you peace of mind, but could potentially save you thousands if your car is written off or stolen.

While it may seem unlikely that something could happen to your car during your finance period, there are over 450,000 accident-related write-offs in the UK each year.

And between 2018-2019, over 114 thousand motor vehicle thefts were reported across England and Wales.

If you decide against RTI Gap insurance, it’s important to remember that you are responsible for making up the difference between the total loss settlement and any outstanding finance with the lender.

If you’re not in a financial position where you can afford to do so, it may be a good idea to look for another type of insurance, for example Gap Insurance.

Gap insurance is similar to RTI Gap, however instead of your insurer returning the purchase price of the vehicle, they simply cover the shortfall between the current value of the car and your outstanding finance.