You get your new lease car and ride off into the distance looking sharp: sunnies on and the wind in your hair. The last thing on your mind as you tear into the chorus of Don’t Stop Me Now (because you’re having such a good time) is your policy documents and whether you ticked that box to add GAP insurance…
If your lease car is written off* the nitty gritty of your insurance policy starts to matter. You would still owe your leasing company the outstanding payments and could be left paying monthly for a car you can no longer drive.
GAP insurance is the secret to making sure you can end your agreement with your leasing company and maybe even have enough left for a deposit on another lease car, to drive off into the sunset honking your brand-new horn.
*Written off: When the insurer decides that the cost of your vehicle’s repair is higher than the cash value of the vehicle following an accident.
GAP (Guaranteed Asset Protection) insurance covers the difference, or the ‘gap’, between your vehicle’s price when you leased it and its market value* when you make a claim.
*Market value: the expected price if you sold your vehicle.
We all love our cars. What we don’t love is when our new car is written off.
It’s worth knowing that even with comprehensive coverage on your car insurance, it will only pay the market value of the vehicle at the time. So, what happens if the total you owe your leasing company is a higher amount?
GAP insurance covers the difference between the market value and your outstanding lease payments total. This means you will be able to pay your lender and exit your payment agreement.
Claire leases a car valued at £25,000 and agrees to make payments over three years. Two years later, Claire’s car is in an accident. ‘It’s a write-off,’ the insurer tells her. Claire knows her comprehensive insurance will pay her the market value of £8,000.
The leasing company lets Claire know she needs to pay the total outstanding rental payments or £12,000 to end her agreement. She will get £8,000 from her insurer but Claire needs to find £4,000 to end her finance agreement before she can even think of finding a deposit for her next car.
But Claire checks her insurance documents. She did buy GAP insurance!
Her insurer covers the market value of the car, £8,000, and the difference between how much she paid for her car, £20,000… Phew!
Sure, new cars look and smell great but they do lose their value. That’s probably why you want to lease one. But it’s also a great reason to get GAP-insured.
According to the AA, if you drove 10,000 miles a year, your new car’s value might reduce like this:
– End of year one: around 40%.
– End of year three: around 60%
So, if your new lease car is valued at £15,000 it will be worth:
– End of year one: £9,000
– End of year three: £6,000
If it was stolen in year three, you could have £9,000 left to pay. Ouch.
This is the type of GAP insurance you need if you are leasing your car. It covers you for any remaining payments on your lease.
You have two main obligations:
Firstly, you have to give accurate and complete answers to all the questions in your application.
Secondly, you absolutely have to observe the terms, conditions and exclusions of both the policy and your
Providing your broker hasn’t given you the option of paying in instalments through a credit facility, we ask that you pay the total premium in one full payment before the policy starts.
Sorry, no. You need comprehensive insurance to add GAP insurance.
You’re covered for the length of the agreed policy. It’ll start and end on the dates listed in your insurance schedule. Your policy will also be terminated if you make a claim and receive payment.
We’d hate to see you go but if you really want to you’ll need to get in touch with the broker who sold your policy to you. If you’re unsure, give Autoassure a ring on 0114 321 9883 and they’ll be able to help track them down for you.
If you decide that it’s not working between us within 30 days of buying your policy, we’ll give you a full refund. Otherwise, anything after the 30 days will be calculated pro-rata. This means that we’ll refund you what’s left, minus the retention fee, which is £35.00.
Absolutely not. You can buy your GAP insurance anywhere but read on to find out a few great reasons to pick ours.
Nope. GAP insurance is always optional.
As well as the UK, we’ll cover you in any other EU country as long as it’s outlined in your main motor policy.
For more information about Just Drive GAP insurance or if you have any further questions about leasing our range of brand new cars, get in touch using the button below.