What is contract hire gap insurance?
More importantly is contract hire gap insurance worth considering?
Contract hire gap insurance / finance gap insurance is the oldest form of gap insurance and some say still the best.
Originally contract hire gap insurance was called Shortfall insurance it was designed in the USA specifically for customers who had bought vehicles on contract hire or lease. Yes gap insurance as we know morphed over time in line with customers buying cycles and change history but for anyone who has bought their vehicle on a form of lease where they can not own the vehicle at the end of the contract it still remains as good as it did all those years ago.
The reason is that in the eyes of the insurance world you can never benefit from something bad happening. This means that if the vehicle is not yours and can never be yours then it can not be yours to protect. So if you will not be able to protect the invoice or replacement cost.
Contract hire gap insurance simply put ensures that if your contract hire vehicle is written off then you can walk away with no further financial liability.
Don’t forget that your contract hire agreement does not simply stop if your vehicle is written off. Your contract hire company will have based your rentals not only on how much you are paying but also on how much they think that they will be able to dispose of your vehicle for at the end of the contract. Yes if your vehicle is written off then your own motor insurance company will pay your lease company the market value of what your vehicle was work on the day it was written off but what about the outstanding rentals/ finance.
Depending upon your contract hire company this liability could be called many different things. However no matter what they call it, it is an amount on top of your vehicles valuation that you are obliged to pay to close your financial liability.