Under what circumstances does a Contract Hire Gap Insurance policy suit better than a Vehicle Replacement Insurance policy? Not many times, that is for sure but if you have a vehicle on particular types of vehicle lease then this may well be the case.
If you have a car or van on a style of lease where you cannot own the vehicle at the end of the agreement, then your liabilities are limited to the outstanding settlement on the lease. As you cannot own the vehicle at any point, you are not looking to cover its replacement cost. .
Why Contract Hire Gap Insurance?
Vehicles on lease are simply secured on a rental basis for the user, and you will not be the legal owner on the vehicle, or named as such on the V5.
If your lease vehicle is written off by your motor insurance company, then your leasing agreement will look for two elements. The first is the ‘market value’ of the vehicle at the time it is written off. This figure is met by a good motor insurance policy, fully comprehensive in cover.
The second element that your leasing company will look for is a proportion of the outstanding rentals on the agreement. So if you still had 36 months on the agreement, at £300 per month, then they could ask for up to 100% of these to settle the finance.
However, a Contract Hire Gap Insurancepolicy will cover this potential shortfall, allowing you to protect this outstanding finance settlement, and clear you agreement with no further financial outlay.
For this specific reason, a Contract Hire Gap Insurance policy is far more suitable for this very unique type of finance arrangement.
Where to get Contract Hire Gap Insurance?
Similar to Vehicle Replacement Insurance, Contract Hire Gap Insurance is quite a rare type of gap cover to source. Your leasing company or motor dealer may be able to supply it, but there are several specialist Contract Hire Gap Insurance brokers on the internet. Prices from these retailers are normally much cheaper for Contract Hire Gap Insurance too.
So as much as we think VRI Gap Insurance is a great idea, Contract Hire Gap Insurance may be better under some circumstances.