You just get your new or nearly-new lease vehicle and drive off into the distance looking stylish – you have your sunglasses on and the wind in your hair. The last thing you think about as you’re about to sing the chorus of Don’t Stop Me Now (because you’re having such a good time) is your policy documents and whether you ticked the box ‘Do you want to add GAP insurance’.
This guide explains what GAP insurance is and why you should consider purchasing it to put your mind at rest should your lease vehicle be written off or stolen.
If your lease car is declared a total write off, GAP (Guaranteed Asset Protection) insurance pays out the difference between the value of the vehicle at the time of loss and the remaining finance owed on the lease.
You won’t be required to take out a GAP insurance policy by the finance provider of your chosen lease deal. However, it can give you added peace of mind during your agreement if you’re worried about being charged extra for the vehicle in the worst-case scenario.
There are two main types of cover for GAP insurance policies, which are:
When leasing a vehicle, GAP insurance can be a good investment and give you peace of mind, particularly if you’re worried about not getting the original value of the vehicle back if it’s written off (damaged beyond repair) by your insurer.
Although the chances of your vehicle being written off or being stolen are very slim, it’s worth noting that according to Churchill Insurance, around 384,000 cars are written off each year. In addition, the DVRLA confirmed that just over 74,000 vehicles were stolen in 2020. These are statistics which you should consider when deciding whether to take out GAP insurance for your leased car.
GAP insurance is particularly worth it if your car or van is on a finance agreement or you have outstanding payments on a personal loan. If the vehicle is unfortunate enough to be a total loss and your vehicle’s value has depreciated, you will probably find there’s a shortfall between how much you receive from the insurance claim and how much you still have to pay off for the vehicle.
This could mean you end up paying finance instalments on a car that’s not even on the road anymore. But the finance company may also demand that you pay off the entire loan amount.
Hopefully, you may never need to make a claim on your insurance for a total loss, but GAP insurance will enable you to get enough compensation to lease or purchase another vehicle.
*Some insurance providers may include cover for fitted extras/accessories, so ensure you shop around for the best policy.
The cost of GAP insurance is based on different things, such as the value of the leased vehicle, your contract length and the level of cover you wish to have.
GAP insurers have online sites which will allow you to run a free quote within minutes.
You can normally take out GAP insurance for between 1 to 5 years, depending on how long your lease agreement is for. Typically, most GAP insurance cover lasts 3 years as this tends to be one of the most popular leasing contract lengths.
For any further questions on GAP Insurance, please call us on 02392 245572.
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Telephone : 02392 245570
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