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RTI or return to account insurance is a form of guaranteed asset protection or gap insurance. You may think you have all the insurance you need and you’re covered for any eventuality, and you are, to a certain extent. The fact is that if your car is written off due to an accident, fire or theft, an engine your insurance company will only pay you a current market value of the car. No matter how well you’ve cared for the car, its market value will be much less than the amount you originally paid for it. Most car owners do not realize that their car starts to lose its value as soon as they drive her showroom!
One of the reasons that some will carry on driving the same old car wheels fall off and the engine seizes is because they know that as soon as you start to drive, it goes into negative equity. Negative equity means that there is less value in something than it was when you acquired it. Unlike paintings and other artistic objects, vehicles do not increase in value. Once you have bought your car and start driving it, then it is down all the way in terms of equity.
If you want to protect the original investment you made in your car, then you need to take out a special insurance policy. You may feel that you have more than enough insurance when, but the problem is you do not have that kind of cover that will bridge the gap between the current market value of the car and the amount of money it would cost to replace it. Unless you do not have to worry about the replacement cost of the vehicle, then you have something that meets the additional costs.
Let’s take a look at examples of how RTI Insurance works.
Mr Jones buys a car for an agreed inclusive £ 15,000.00.
He paid a deposit of £ 1,000.00.
He pays a debt to the supplier of billing £ 14,000.00.
Unfortunately, after 24 months of car happy motoring Mr Jones is stolen and written off by his company. After some discussion, Mr. Jones make a final insurance settlement offer of £ 7,500.00.
This leaves a deficit between INSURANCE CO. Valuation and the original purchase price of £ 7,500.00.
Mr Jones needs to finance the purchase of their next car! With Profitability account policy, Mr Jones would get the difference £ 7,500,00.
Return to account insurance will help to protect the original investment you made in the car, which will always be greater than the current market price of the same car.
Vehicle declines in prices as the owner begins to run it. If you have an accident or car theft, motor insurance company will only pay you a current market value after depreciation. Gap or RTI insurance is designed to bridge the gap between the amount of money you would need to replace the car and lower the value of the stolen car or depreciation.
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