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Who should be the GAP Insurance policyholder?


This is one of the most commonly asked queries when people want to buy GAP Insurance for a vehicle. In most cases, it is a very simple answer. But, there can be cases where it takes a bit more thought to arrive at the right answer. Who needs to be the GAP Insurance policyholder?


In simple terms, the GAP Insurance policyholder must be the vehicle's registered keeper and/or owner.


The only exception is when the GAP policy is for a contract hire style lease, where there is a long term, fixed rental agreement in place with no option to buy. Here the leaseholder cannot be the vehicle owner, nor will the vehicle be registered to them. The GAP Insurance policy, in this case, the GAP Insurance policy must be in the name of the lease agreement holder.


To expand on this subject, there are several factors to consider. However, the most important factor to consider is......


It is all about 'insurable risk'


An insurable risk is a bit of a technical term. Really, it simply means who could be in a position to lose out financially if the vehicle is written off. This can happen if the vehicle is in a fire, theft flood, accident, and so forth. 

Let's consider a few different ways in which a vehicle can be purchased and who may have an insurable risk. 

  • Cash purchases - the buyer of the vehicle, who has the invoice for the sale in their name. 

  • Personal Loans - as personal loans are against the person, not the vehicle, this can be considered the same as with cash buys. So the person who is named as the owner on the sales invoice. 

  • HP or PCP financed deals - the person who has the finance in their name could stand to lose out if the vehicle is written off. They would also be named on the sale invoice for the vehicle. 

  • Lease or Contract Hire - this is where you have a lease that you have no option to own the vehicle. You can only hand it back at the end. In this case, the lease terms will ask you to settle off the lease, in the event of a total loss. This means that the leaseholder has an insurable risk on the vehicle. This is not to own it, or for the purchase price, just to pay off the lease. 

Got more questions? See our Complete GAP Insurance Guide

Who must be insured on the vehicle?

For the GAP Insurance to work, the person with the insurable risk must be named on the GAP policy. The same person must also be named on the main motor insurance policy, and be fully comprehensively insured. 

You can have other named drivers on the main motor insurance, which will also be covered on the GAP cover. The key is ensuring the person (or company) with the insurable risk is named on your GAP cover.


What about vehicle registration?


The V5 document is normally in the name of the person who has bought the vehicle outright, or who has the finance in their name. We expect the V5 and the GAP Insurance policyholder to be in the same name for the policy to be eligible. 


The one exception to this is for a Lease/Contract Hire where there is no option to own the car. Normally, the V5 is in the leasing company name. We would require that the name of the person on the lease is the person named on the GAP cover. This can be a company for business leases. 


Who cannot benefit from a GAP policy?


Essentially someone cannot lose out financially if the vehicle is written off. 


An example of this would be where you have a named driver on the main motor insurance where the vehicle is owned, financed, or leased by someone else. This named driver does not have an insurable risk, so any GAP policy could not benefit them. 


If you have any doubts about who to put as the GAP Insurance policyholder please contact us for further advice.