Car leasing and Guaranteed Asset Protection (GAP) Insurance explained
What is GAP insurance?
When you lease a car it might be in your best interest to take out a GAP insurance policy to cover you in the event of a write-off occurring with your lease car, however it all depends on the type of lease contract you take out and whether it will be beneficial to you.
GAP insurance is basically a financial product which is generally available and sold to those who decide to lease a brand new car and designed to protect motorists against financial loss in the event your lease car is confirmed a total loss by your insurers because of theft, a fire, flooding or a collision.
If your insurer declares your car a write-off, there could be a ‘gap’ between how much your motor insurers pay out and how much is still owed against the lease car.
With a GAP insurance policy, you are covered for the monetary difference between the pay out by your insurers and the amount required to pay the balance still outstanding on your finance agreement.
So how does GAP insurance work?
What GAP insurance was designed for is to cover the difference between how much the actual value of the vehicle is and the reasonable market value suggested by your motor insurers.
For example, if you car is written off after an accident, or stolen whilst you are within your lease period, your motor insurer will normally pay out what the vehicle is worth based on the current market value at the time the incident occurred.
When a brand new car is involved, which is what all our lease cars are, this will more than likely be less than what you still owe on your finance agreement, which could leave a ‘gap’ between how much your insurer pays out and the amount still to be paid on your finance agreement.
To be eligible for GAP insurance, you must take the policy out within the first 60 days of delivery of your brand new lease car.
For more information regarding our car leasing services and fantastic offers please click here, or give us a call on 0844 846 4007.