GAP Insurance for Contract Hire/Leasing

adamsupergeek

Active Member
Dec 11, 2018
121
78
I've been looking into getting GAP Insurance for my new lease, but not sure if it is required or not, here is the wording from my hire agreement:

"In the event that the Vehicle is stolen or, in the opinion of the insurance company, damaged beyond economical repair, the Hirer will notify ARVAL immediately.

The Hirer hereby assigns to ARVAL the right to receive any monies due from the insurers. The Contract Term will terminate on receipt by ARVAL of such insurance monies or upon notification to ARVAL that the insurers have declined or refused to make any payment under the insurance policy and ARVAL will calculate the difference between the insurance proceeds received and the ARVALWritten Down Value at the date of termination of the Contract Term plus ARVAL's standard early termination administration fee plus VAT to produce a charge or credit. Any charge will be invoiced to the Hirer."


My take on this is that in the event of the vehicle being stolen or written off, the hire company will receive a settlement from the insurance company, if it's enough to cover 'their' value of the car, then I have nothing to pay, if the settlement doesn't cover 'their' value of the car, then I will be charged the difference.

What is the likelihood that the hire company's 'value' of the car will be more than what the insurance company will pay out?
 

Ryosaurus26

Active Member
Oct 25, 2018
68
58
I've been looking into getting GAP Insurance for my new lease, but not sure if it is required or not, here is the wording from my hire agreement:

"In the event that the Vehicle is stolen or, in the opinion of the insurance company, damaged beyond economical repair, the Hirer will notify ARVAL immediately.

The Hirer hereby assigns to ARVAL the right to receive any monies due from the insurers. The Contract Term will terminate on receipt by ARVAL of such insurance monies or upon notification to ARVAL that the insurers have declined or refused to make any payment under the insurance policy and ARVAL will calculate the difference between the insurance proceeds received and the ARVALWritten Down Value at the date of termination of the Contract Term plus ARVAL's standard early termination administration fee plus VAT to produce a charge or credit. Any charge will be invoiced to the Hirer."


My take on this is that in the event of the vehicle being stolen or written off, the hire company will receive a settlement from the insurance company, if it's enough to cover 'their' value of the car, then I have nothing to pay, if the settlement doesn't cover 'their' value of the car, then I will be charged the difference.

What is the likelihood that the hire company's 'value' of the car will be more than what the insurance company will pay out?
It’ll be within the finance companies best interest to get as much money for the vehicle as possible in the event of a write off as they own on the vehicle. However if there is any difference between what it’s worth and what the insurance payout, you may have to pay the difference.

If you want to fully safe guard yourself, then get GAP.




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bgb

Active Member
Jan 22, 2019
589
307
I would 100% get GAP, i have it on my PCP.

it saves the whole argument with insurance paying you under the cars financial commitment value IMHO.

Just as a side note, i Googled GAPInsurance.co.uk and found this code - MONEY10 , which in effect brought my 2 year with deposit cover down to £75(odd) :thumbup:
 

surrealjam

Active Member
Jan 8, 2015
328
53
I generally avoid getting insurance unless I have to legally, or just simply couldn't afford it if something went wrong. This is not sound advice just my own take on it(!). Obviously the insurance company will make sure the premiums cover their costs with the difference being their profit margin (oversimplified of course). Getting insurance, or not getting insurance, is exactly the same as gambling.

Devil's advocate, I totally agree on the comment above - to be 100% safe, get a policy.
 

CupraGeezer

Active Member
May 11, 2018
324
135
I generally avoid getting insurance unless I have to legally, or just simply couldn't afford it if something went wrong. This is not sound advice just my own take on it(!). Obviously the insurance company will make sure the premiums cover their costs with the difference being their profit margin (oversimplified of course). Getting insurance, or not getting insurance, is exactly the same as gambling.

Devil's advocate, I totally agree on the comment above - to be 100% safe, get a policy.
This is my policy (no pun intended) too. I have car and bike insurance as it's a legal requirement and home insurance because the sums involved make it foolish not to have. Everything else, I pass on (including extended warrantees). Just my choice.
 

kevlar

Active Member
Oct 23, 2018
98
64
I've been looking into getting GAP Insurance for my new lease, but not sure if it is required or not, here is the wording from my hire agreement:

"In the event that the Vehicle is stolen or, in the opinion of the insurance company, damaged beyond economical repair, the Hirer will notify ARVAL immediately.

The Hirer hereby assigns to ARVAL the right to receive any monies due from the insurers. The Contract Term will terminate on receipt by ARVAL of such insurance monies or upon notification to ARVAL that the insurers have declined or refused to make any payment under the insurance policy and ARVAL will calculate the difference between the insurance proceeds received and the ARVALWritten Down Value at the date of termination of the Contract Term plus ARVAL's standard early termination administration fee plus VAT to produce a charge or credit. Any charge will be invoiced to the Hirer."


My take on this is that in the event of the vehicle being stolen or written off, the hire company will receive a settlement from the insurance company, if it's enough to cover 'their' value of the car, then I have nothing to pay, if the settlement doesn't cover 'their' value of the car, then I will be charged the difference.

What is the likelihood that the hire company's 'value' of the car will be more than what the insurance company will pay out?
I would say very likely personally - I know someone personally who had the car written off, difference was about 8k and yes they had to pay that 8k...how painful would that be and for how much the gap insurance costs is it really worth the risk?
 
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surrealjam

Active Member
Jan 8, 2015
328
53
I would say very likely personally - I know someone personally who had the car written off, difference was about 8k and yes they had to pay that 8k...how painful would that be and for how much the gap insurance costs is it really worth the risk?
£8k though? The car must have been under insured. Let's say the car is £30k new and you write it off after a year - if the lease company valued it at £25k, that's the insurance company only giving you £17k. It shouldn't happen to that extent.
 

kevlar

Active Member
Oct 23, 2018
98
64
Insurance will give you market value thats it, that is where the issue comes into it...
 

surrealjam

Active Member
Jan 8, 2015
328
53
Are you sure that example was for PCH though, rather than PCP? My understanding was your insurance company will settle with the lease company directly whatever is outstanding. Obviously you'd still be liable for any excess though but that's no different to writing off your own vehicle.
 
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superdon

Active Member
Jan 30, 2017
94
9
Are you sure that example was for PCH though, rather than PCP? My understanding was your insurance company will settle with the lease company directly whatever is outstanding. Obviously you'd still be liable for any excess though but that's no different to writing off your own vehicle.
Yep I reckon, probably more sensible to take GAP on a PCP.
 
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