In the event of your car being written off, your insurance company would pay you a sum equivalent to the vehicle's value at the time of the accident - so if your car was then one year old and had 10,000 miles, the payout would be equivalent to an identical vehicle of this age and mileage. Vehicle Shortfall Insurance is a type of Guaranteed Asset Protection (GAP) insurance, and as you would own the vehicle outright it would reimburse you to the value of what you originally paid for the vehicle. Whether you need it or not is a personal choice - it depends on whether you would be content to have the funds to replace your vehicle as it was at the time of the incident or wanted the original amount returned to you.