Gap Insurance on Contract Hire: Why You Need It

If you`re considering leasing a car, you may already know about gap insurance. It`s a type of insurance that covers the difference between what you owe on your car and the actual cash value of your car in the event of an accident or theft. This is important because if your car is totaled or stolen, your insurance company will only pay you the actual cash value of the car, which could be less than what you owe on your lease. That`s where gap insurance comes in, to cover the difference.

But did you know that you can add gap insurance to your contract hire agreement as well? Contract hire is another form of vehicle leasing, but it differs from traditional leasing in that you don`t own the car at the end of the lease term. Instead, you simply return the car to the leasing company. Because of this, adding gap insurance to your contract hire agreement is especially important.

Why is gap insurance on contract hire important?

When you lease a car, you agree to make regular payments for a set period of time, usually from two to five years. At the end of the lease term, you return the car to the leasing company, and you`re responsible for any damage to the car beyond normal wear and tear. However, if your car is stolen or totaled before the end of the lease term, you may find yourself in a difficult financial situation.

If you don`t have gap insurance, you could end up owing more money than your insurance company is willing to pay. This can happen because the insurance company will only pay you the actual cash value of the car, which could be less than what you still owe on the lease. If you don`t have gap insurance, you`ll be responsible for paying the difference out of pocket.

Adding gap insurance to your contract hire agreement can help protect you from these scenarios. With gap insurance, you`ll be covered for the difference between what your insurance company pays and what you owe on your car.

How to add gap insurance to your contract hire agreement

Adding gap insurance to your contract hire agreement is easy. You`ll simply need to contact your leasing company and ask about their gap insurance options. Some leasing companies may include gap insurance in their standard agreements, while others may offer it as an add-on.

When you`re considering gap insurance, make sure to read the terms and conditions carefully. Some gap insurance policies only cover a portion of the remaining lease payments, while others may have deductibles or other limitations. Make sure you understand what you`re getting before you sign the agreement.

Conclusion

Leasing a car can be a great way to get a new car without the high cost of ownership. But it`s important to protect yourself financially in case of an accident or theft. Gap insurance on contract hire can help ensure that you`re not left with a large bill to pay if your car is stolen or totaled before the end of your lease term. Contact your leasing company to learn more about your options for adding gap insurance to your contract hire agreement.