If you are reading this then you are just about to get a vehicle on contract hire and your leasing company have quoted you anywhere from £295 to just under £800 for their type of contract hire gap insurance.
Like most of us today you liked the idea, hey who would not want to know that if the worse happens that you are not left out of pocket or worse with outstanding finance.
But do you know what Contract Hire gap insurance is?
Do you know what contract hire gap insurance does? I mean we can all read the terms and conditions but what can it do for you and why should you consider it. There are so many different types of policies which one is right for you?
To understand contract hire gap insurance you need to understand what you financial liability is if your contract hire vehicle is written off.
If your contract hire vehicle is written off your own motor insurance company will pay the market valuation on the day it is written off. Standard practise and no surprises there.
Your contract hire company will then send you a settlement letter. This is where is can get confusing, depending upon your contract hire this settlement could be anything up to 90 % of all outstanding rentals. After all your rentals where based loosely on not only how much your contract hire company where going to receive in payments but also how much they where going to be able to dispose of the vehicle for at the end of the contract. They now have no vehicle to dispose of so they can re-cooup their costs.
Without contract hire gap insurance you are responsible for this difference bewteen your vehicles market valuation and the settlement. This could be thousands and thousands of pounds.
Contract hire gap insurance can protect you against this. After all you could never own the vehicle so under the terms of insurance you can never benefit from it no longer being there but you can protect yourself from these out of pocket expenses.
Let me show you what I mean.
Lets say that you have just bought a vehicle on contract hire 3 + 35 payments of 299 & vat.
18 months in to the agreement the vehicle is written off.
Your contract hire company send you an invoice for £4574.70 & vat (90% of outstanding rentals.)
Without contract hire gap insurance you now have no vehicle, no deposit and have to find the £5,000 or so pounds to clear the old finance.
With online contract hire gap insurance from as little as £39.00 for one years cover and the price of a standrad 3 year policiy less than £100 now could be a good time to think about protect ing yourself.
Even if you have bought your vehicle some time ago it is never to late to start to protect yourself with contract hire Gap insurance.