The is a lot of information on the internet regarding contract hire gap insurance.
What is contract hire gap insurance?
How can it help you?
The major issue if though is that it can be a little confusing.
Advanced rentals, back rentals, settlements and market values, are all terms commonly used but what are they, have can if affect you and why should you think about contract hire gap insurance?
If you are buying a vehicle on contract hire you may not be aware that if your vehicle is written off during the lifetime of your policy it will not simply be the end of your contract.
Don’t forget that your contract hire company will have based your rentals not only on how much you are paying them each month but also how much they think that they will be able to dispose of your vehicle for at the end of the contract.
This means that if your vehicle is written off as well as being paid the market value for your vehicle from your own motor insurance company they are within their rights to ask for up to 100 % of all outstanding rentals on top.
Yes they may call it rentals, back rentals, settlements in fact however they want to name it really does not matter the main issue is that it is a financial amount on top of your own vehicles value which you are legally responsible for.
Without any form of contract hire gap insurance you leave yourself open to having to pay this amount on your own.
Contract hire gap insurance is designed to pay the difference between your vehicles valuation on the day it is written off and the amount still outstanding on finance. Yes you still have no vehicle and yes you still have to find another advanced rental / deposit but thank fully you now have no financial liability to your old vehicle.
So in summary finance and contract hire gap insurance means that if your vehicle is written off at least you can walk away, draw a line in the sand and start again.