Lease GAP Insurance

Vehicle Gap Insurance: What You Need to Know

What is Vehicle Gap Insurance?

Vehicle gap insurance, also known as "guaranteed asset protection" insurance, is a type of coverage that helps protect you financially if your leased vehicle is stolen or written off. It covers the "gap" between what you owe on your lease and the actual cash value of the vehicle at the time of the accident or theft. This means that if you owe more on your lease than the vehicle is worth, gap insurance will cover the difference.

Should I Get Vehicle Gap Insurance?

Whether or not you should get vehicle gap insurance depends on your individual circumstances. If you have a long-term lease, a high down payment, or a low interest rate, gap insurance may not be necessary. On the other hand, if you have a short-term lease, a low down payment, or a high interest rate, gap insurance could be a wise investment. It's also worth considering if you're leasing a vehicle with a high depreciation rate or if you're at risk of driving a lot of miles.

How Much Does Vehicle Gap Insurance Cost?

The cost of vehicle gap insurance varies depending on a number of factors, including the type of vehicle you're leasing, the length of your lease, and the amount of coverage you need. In general, policies range from around £100-£300 for multi-year coverage. Visit ala.co.uk for further information.

What Types of Vehicle Gap Insurance are There?

Lease GAP Insurance - This is also known as Contract Hire GAP Insurance. If you have leased your vehicle rather than buying it, this will be the most appropriate option for your financial situation. Due to lease agreements having so many pre-determined repayments – which are usually required to be paid if the agreement is terminated early – these can prove incredibly expensive if something was to happen to the vehicle. Lease GAP Insurance aims to cover all of that worry, providing enough to satisfy any remaining repayments. With modern leasing, there is often a large deposit required at the start of the contract, and you can choose to protect this as part of your GAP insurance.

Finance GAP Insurance - One of the simpler products available, this policy is often attached to other forms of coverage as part of a package. Designed to fulfill any outstanding finance repayments of a vehicle that’s been written off, it doesn’t tend to extend to payments concerning negative equity.

What is Excluded from Vehicle Gap Insurance?

While there are multiple policy types, there are still instances within all of those that GAP Insurance simply won’t cover. While these obviously differ between brokers and individual policies, there are some common exclusions that it’s worth being aware of.

• The most important exemption – and one that is always in place – counts against those who do not have a comprehensive car insurance policy in place. Before you even consider GAP Insurance as a possibility for your vehicle, you should ensure that you have the right level of car insurance in place first, otherwise you will be paying out for something which simply won’t come into effect when needed. If you have cover but it isn’t comprehensive, this should be upgraded and obtained prior to any additional policies being put in place.
• Claims where your car insurer fails to declare that your car is at a total loss are not applicable, so if it’s just heavy damage without being completely written off, cover will not be available.
• These policies are concerned with normal road legal driving – the things we all use our cars for day-to-day – so anyone who’s racing their car at a rally or as part of any other kind of competitive driving event won’t get covered in the event of a write-off.
• If you’ve modified your car in any way – the appearance, the interior, the technology – anything that may’ve added any value, this won’t be met. It is only the original value that is covered as part of your policy, so you should take this into account when putting any additional funds into your vehicle.
  
  

How Does Vehicle Gap Insurance Work?

If your leased vehicle is stolen or written off in an accident, your insurance company will typically pay out the actual cash value of the vehicle at the time of the incident. If you have gap insurance, the coverage will kick in to cover the difference between the actual cash value and the amount you owe on your lease. Without gap insurance, you could be left paying thousands out of your own pocket to cover the remaining balance on your lease.