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Why should you buy Contract Hire Gap Insurance?


What is contract hire gap insurance? Why do you need it, and what can it do for you to ensure that if your vehicle is written off, you are not left with no vehicle to use and potentially a large invoice to settle?


What is Contract Hire/Lease Hire Gap Insurance?


If your vehicle is written off, your Total Loss Contract Hire Gap Insurance will pay the difference between your motor insurance company's settlement and the amount needed to clear your financial obligations under the terms and conditions of your contract. 

This outstanding chunk of money can be made up of different components. 

  1. Differences in market value
  2. Early Termination fees
  3. A proportion of future rentals.


We call it a shortfall. In the event of a total loss, your motor insurance company would only ever pay out the vehicle's value at that point; your lease company would then receive this figure and issue you with an outstanding settlement figure. Your Contract Hire Gap Insurance would clear the amount owed on the agreement, and you walk away with no financial liability. Please remember that any late payment charges or arrears on the lease will be deducted from any settlement.


Contract Hire Gap Insurance Quote  All Named Drivers covered on your Total Loss Gap Insurance policy * T&C's Apply  Contract Hire Gap vehicles up to £1000 per month

* All named drivers over 18 years of age with a full UK licence named on your fully comprehensive motor insurance policy

** No Claim limit for vehicles with a monthly rental of up to £750. Rentals Over £750 and up to £1000 have a £25,000 maximum Claim Limit

*** Find a better price for the same policy. Let us know, and we will beat it! No gimmicks and no fuss. 


Compare our Key Benefits - Contract Hire Gap Insurance - TotalLossGap

  1. No Maximum Claim Limit **
  2. Up to £3,000 Deposit Protection available.
  3. Up to 4 Years Cover. 
  4. Best Price Guarantee *** 
  5. All Named Drivers Covered *
  6. There are no mileage restrictions.
  7. European cover included.
  8. Payment towards Excess.
  9. UK-Based Claims and Call Centers.
  10. 30-Day Cooling Off period.
  11. Instant Cover.
  12. Policies Backed by the Financial Services Compensation Scheme

A good feature to consider adding to your Contract Hire Gap Insurance policy is the ability to protect up to £3,000 of any initial rental/deposit you may have put towards the vehicle. 


Deposit protection can be added during the quotation process; click to select the initial deposit protection. Once selected, the policy will do exactly as described previously; however, rather than you walking away with no outstanding liability and no cash to put towards a new vehicle, you now walk away with no liability, and your initial rental/deposit is back with you to do with as you wish.


So, how many contract hire gap insurance policyholders buy deposit protection?


From our sample data set, our contract hire gap insurance policyholders appear to appreciate being able to protect their initial rental.

When policyholders buy a two or three-year contract hire policy, they are almost twice as likely to buy it with deposit protection compared to an unprotected policy.




Is Contract Hire Gap Insurance suitable for you?

If you have sourced a car or van and financed it using a form of Lease or Contract Hire agreement where you have no option to own the vehicle at the end of the agreement, this policy has been designed explicitly for your circumstance. As you cannot own the vehicle at the end, your only liability is what you would owe to the finance company. Therefore, you can't protect either the invoice price or the replacement cost. 


If you can own the vehicle at the end of the agreement, you may be eligible for different types of Gap Insurance. 


However, if you can own the vehicle once the contract has ended, either through a third party or even purchase it yourself, as it is not officially within the initial agreement, it is not a guaranteed right of purchase. In that case, you don't have the legal right to take full ownership, so this policy is still the most suitable. 


Common Questions about Contract and Lease Hire Gap Insurance

1. How can I  Buy Contract Hire Gap Insurance?

As always, we try to keep things simple. We ask you to run through some simple eligibility questions. Once this is completed, we only ask you two things:

  1. The monthly rental amount you are paying in the lease. e.g. £250 per month
  2. The number of years of cover you need.

That is it. Pop those details in, and you will receive a premium price for the entire term. The only option you can consider adding is the one for Deposit Protection. If you wish to add it, click the drop-down box below the premium price and tick the option displayed.


2. Do I need Gap Insurance on a lease or contract-hire vehicle?

When you take a lease or contract hire deal on a vehicle, you are committing to the terms of that agreement. You will have a settlement to pay if the vehicle is written off part-way through. If the motor insurer's settlement does not cover this, you can have a shortfall to pay. 

Whether you need Gap Insurance on a lease is a matter for you. It is neither a legal nor contractual need to have Gap. But, if you would like any potential shortfall protected, it can be a great idea.


3. Can you buy Lease and Contract Hire Gap Insurance by itself?


Gap Insurance can only be used with a fully comprehensive motor insurance policy. In the event of a claim, the motor insurer must pay out the market value settlement on your vehicle. If so, then you can claim your Gap cover. If you buy Gap Insurance alone, without motor insurance, you cannot legally drive on the road.

If you ask whether you can buy Contract Hire Gap Insurance away from the supplying motor dealer, leasing company or finance house, the answer is yes! You can buy Cotract hire Gap Insurance from an independent provider, such as Total Loss Gap, to cover your lease. Your dealer or leasing company cannot impose a rule that you buy from them. The dealer should not tell you that you must buy from them or include it in the deal without your consent. If they do, then you can discuss that with the Financial Conduct Authority.


4. Is a Gap insurance policy worth the money?

Like all insurance, the answer comes down to your view on the risk. Around 500,000 vehicles are written off annually in the UK (between accidents, thefts, fire, etc). Thefts, in particular, are on the rise, with vehicles with keyless entry often targeted. If you have a vehicle on a lease, you are obligated to pay that lease back. If the vehicle is written off, then the amount provided by your motor insurer may not be able to pay the lease off for you.

You could be left in a position of having to pay off the shortfall on any lease if the vehicle is written off. Plus, you may have to find a large deposit 'advanced' rental to put down on a replacement vehicle. Lease/Contract Hire Gap, with the option of deposit protection, could cover these costs for you.


5. Do you need gap insurance if you are covered by fully comprehensive motor insurance?

This is a good question. Your motor insurer should, in the event of a total loss, cover the vehicle's market value for you. This value will be at the time of your claim, not be the same as when your vehicle was new or at the time of vehicle purchase.Would this be enough to cover your lease settlement if you only get the market value in the settlement? If not, then this leaves a shortfall payable to you.


6. My motor insurer offers "new for old" in the first year. Do I need Gap insurance?

Many motor insurers offer to replace your vehicle in the first year with another new model. If so, do you also need Gap Insurance to cover your lease?

There is a good reason not to rely on 'new for old', particularly if you have a lease.

  • It is often a condition that you are the vehicle owner to get replacement cover from the motor insurer. With a contract hire agreement, the leasing company is the owner.

Check your motor insurer terms AND what your leasing company would allow. In our experience, 'new for old' coverage rarely applies to a contract hire or lease agreement.


7. Is Lease or Contract Hire Gap the same as Return to Invoice Gap Insurance?

The simple answer is NO.

Lease Gap is designed to cover a shortfall on a vehicle you do not, and never can own, as part of the lease agreement. Return to Invoice can cover you back to the price you paid for the vehicle, as shown on the purchase invoice in your name.

With a lease there is never a purchase invoice for the vehicle in your name, therefore you cannot claim the invoice price back, as you have never paid it.

For more information on other types of Gap Insurance, try our Complete Guide to Gap Cover.


8. Are Lease/Contract hire the same for personal and business contract hire agreements?

Pretty much so, yes. The policy is designed to pay off the shortfall payment on your lease. 


9. Does Gap Insurance Cover Early Termination?

It will only cover the 'early termination charge' if your motor insurer writes off the vehicle. That could be following a fire, theft, flood, accident, etc. If you choose to hand back the vehicle voluntarily, say after a redundancy, then this would not be covered by our lease Gap Insurance cover. You would probably need to find another product called Early Termination Insurance to cover those eventualities.


10. Can Total Loss Gap Insurance cover Commercial Vehicles?

Total Loss Gap lease and contract hire Gap can cover light commercial vehicles up to 3500kg. There are some restrictions on vehicle use (e.g. we do not cover 'hire and reward', courier, etc.). If you want to chat about your vehicle, please contact us for clarification.


11. Do I own a vehicle sourced using a contract-hire agreement?

No, you do not have the legal right to take full ownership at the end of your agreement.

In some cases, at the end of your contract, your lease provider may offer you the option to buy it; however, this is not guaranteed, and you would have to negotiate the price at the time. 


12. What happened to my gap insurance at the end of my contract?

Your gap insurance will expire at the end of your lease. If you hand your vehicle back early on the understanding that you have not made a claim you will be able to cancel and get a pro-rata refund.


13. How much is a Contract or Lease hire Gap insurance?

This will depend on several things.

  1. Your monthly rental
  2. How long do you want your policy to cover you?
  3. If you wish to deposit protection
  4. If you want deposit protection, how much cover do you want?

The quickest way is to click for an instant quote. Our automated system will then adjust the prices depending on your chosen cover.


14. Is Contract and Lease Hire gap insurance the same as finance gap?

We would never offer finance gap insurance to a policyholder who has the option to own their vehicle at the end of the finance agreement as potentially there may not be any shortfall to cover, and they could be walking away from a large settlement.


15. Why choose a Total Loss Lease and Contract hire policy?

Our policy is the logical choice for many reasons. 

  1. We do not offer dual prices, discount codes or cashback. Instead, we believe that everyone, no matter who they are, should have access to our best price, first time, every time. You will never find one of our policies anywhere else at a better price.
  2. Our policies are backed by the Financial Services Compensation Scheme ( FSCS), we are regulated by the Financial Conduct Authority, and how your claim is calculated, handled, and settled in Trading Standards is approved. 
  3. We don't pay for affiliations, which are nice but cost money. Instead, we prefer to pass our savings on to you through lower premium prices.
  4. We have longevity. We have been doing this for a long time. Over a decade, so we are here for the long haul. Some providers come and go, so you will be pleased to know that we will be here to help and assist you when you need us.
  5. We don't sell, pass on, or give your data to anyone for marketing reasons. We have to give your details to the underwriters to ensure your policy is secure and in place, but no one else is ever given access.
  6. Our customer support team is not paid using a commission-based structure. Instead, any bonuses they get are based on customer service levels. So, it is in their interest to ensure you are looked after from quote to claim and not to offer a hard sell.
  7. We are proud to be independent, meaning we can cherry-pick policies that offer the best levels of contract and lease hire gap insurance at the best prices. 
  8. But don't take our word for it. Why not look at our Feefo reviews? These are from real people, and each review is independently verified. Unlike other review systems, we can not add, delete, remove, suspend, or alter any review. We can respond to them, but that is as far as our control of them extends. 


16. Where is Total Loss Based?

Unfortunately, we are not based somewhere exotic. Our great British weather can be unpredictable at the best of times, so somewhere once and hot by the sea would be nice. I am sure our team would love to be based somewhere in the Bahamas or, as one motor dealership once told one of our policyholders, above a fish and chip shop. Although it would make lunches easy, it is not so good for our team's waistline. Instead, we are based at Aequitas House, which is located in Hamilton Square. Aequitas House is a beautiful Edwardian townhouse converted into offices in 2015. Hamilton Square is also very famous, with many film studios using the square as a backdrop for film and TV, and we have even had royal and parliamentarian visits.


17. When would my Contract and lease hire gap insurance not pay out?

Every policy has terms and conditions, and ours does, too. We are proud of them, and over the years, listening to you, we have tried to ensure that they are as accessible and straightforward to understand as possible. However, there are important terms you need to understand. Your Contract and Lease Hire Gap Insurance will not pay your claim if.

  • You are not fully comprehensively insured.
  • You are using your vehicle as a driving school
  • You use your vehicle for hire, reward, or delivery.
  • If your vehicle is used for any form of the motor trade, e.g. a body shop loan car.
  • In the event of a nuclear war
  • If your motor insurance company decides that you do not have a valid claim and are not prepared to settle your claim.
  • If you are not over the age of 18.
  • If you do not have a full licence.
  • If you are using the vehicle for class 2 business purposes. e.g. a pool car.

Please see your contract and lease hire policy documents for a complete list of terms and conditions.




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