Contract hire / total loss liability / Gap insurance
Discussion
About to sign-up to a contract hire agreement for a new car. Never done this before (always bought 2nd hand), so on new ground.
Not signing the formal finance agreement yet (so haven't seen full T&Cs), but signing the proposal form, which asks whether we wish to take out gap insurance or not.
So...as it's contract hire (not PCP/HP/etc.), will we have any liability in the event of total loss, and if so how will it be calculated?
Also, what are people's experiences (as opposed to just opinions) on this...for an outright car purchase, esp. 2nd hand, I've always seen it as a gimmick, but if we are liable for any 'gap' to a finance company, I'm starting to wonder...
Thanks,
Martin.
Not signing the formal finance agreement yet (so haven't seen full T&Cs), but signing the proposal form, which asks whether we wish to take out gap insurance or not.
So...as it's contract hire (not PCP/HP/etc.), will we have any liability in the event of total loss, and if so how will it be calculated?
Also, what are people's experiences (as opposed to just opinions) on this...for an outright car purchase, esp. 2nd hand, I've always seen it as a gimmick, but if we are liable for any 'gap' to a finance company, I'm starting to wonder...
Thanks,
Martin.
I have just taken delivery of my new lease car and have taken the contract hire gap insurance cover with ALA upon recommendation from fellow PHers. This cover will pay the difference between the payout from the insurers and the vehicle purchase price but most importantly will cover any outstanding amounts on the finance agreement. I think I paid £195 for £15k cover on the contract hire gap insurance and the price includes alloy wheel insurance for 2 years.
You need to read the terms of your lease agreement as it should say what you would be liable for in case the car is written off. In my case I would be liable for the difference between the insurers payout and the purchase cost of the vehicle but also the remaining balance on the finance agreement which is the main reason I have taken out the gap inurance.
http://www.ala.co.uk/contract-hire-gap-insurance.h...
You need to read the terms of your lease agreement as it should say what you would be liable for in case the car is written off. In my case I would be liable for the difference between the insurers payout and the purchase cost of the vehicle but also the remaining balance on the finance agreement which is the main reason I have taken out the gap inurance.
http://www.ala.co.uk/contract-hire-gap-insurance.h...
Edited by maniac886 on Wednesday 11th June 20:32
havoc said:
Thanks both.
Insurer - hadn't thought that, worth checking.
Price - not surprised, the quote above your post is cheaper than we're being offered. Presumably anyone can sell it to me any time before we take delivery of the car, not least my current broker/insurer?
You need to let your insurer know it's a contract hire car.Insurer - hadn't thought that, worth checking.
Price - not surprised, the quote above your post is cheaper than we're being offered. Presumably anyone can sell it to me any time before we take delivery of the car, not least my current broker/insurer?
Insurers tend only to replace the car in the first year if it's *your* car and you are the first owner. With contract hire the car is not your property.
Normally if there is a claim and the vehicle is written off the insurers will settle with the contract hire finance company and the contract will be cancelled.
If you want peace of mind then you can cough for a policy from the likes of ALA - but in practical terms GAP in this area is probably of limited real value because in most instances the insurers and finance company will settle - I can't recall ever seeing or hearing about the same sorts of hard luck stories that you hear of with loan finance where finance outstanding is way over the value of the car.
Dryce said:
You need to let your insurer know it's a contract hire car.
Insurers tend only to replace the car in the first year if it's *your* car and you are the first owner. With contract hire the car is not your property.
Normally if there is a claim and the vehicle is written off the insurers will settle with the contract hire finance company and the contract will be cancelled.
If you want peace of mind then you can cough for a policy from the likes of ALA - but in practical terms GAP in this area is probably of limited real value because in most instances the insurers and finance company will settle - I can't recall ever seeing or hearing about the same sorts of hard luck stories that you hear of with loan finance where finance outstanding is way over the value of the car.
This man is correct. I wasn't. Forgot about the contract hire.Insurers tend only to replace the car in the first year if it's *your* car and you are the first owner. With contract hire the car is not your property.
Normally if there is a claim and the vehicle is written off the insurers will settle with the contract hire finance company and the contract will be cancelled.
If you want peace of mind then you can cough for a policy from the likes of ALA - but in practical terms GAP in this area is probably of limited real value because in most instances the insurers and finance company will settle - I can't recall ever seeing or hearing about the same sorts of hard luck stories that you hear of with loan finance where finance outstanding is way over the value of the car.
I was in the same position recently - my first private lease.
I wasn't sure how much value GAP would be to me, but I took out a basic policy to cover the shortfall (up to£7.5k) if there was any. It was only ~£70 for 2 years - so at £3 per month, it seemed like a minimal extra cost for the peace of mind
I wasn't sure how much value GAP would be to me, but I took out a basic policy to cover the shortfall (up to£7.5k) if there was any. It was only ~£70 for 2 years - so at £3 per month, it seemed like a minimal extra cost for the peace of mind
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