Finance Gap Insurance

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Finance Gap Insurance

Finance Gap Insurance is specifically developed to cover the costs of negative equity built up by a vehicle that was purchased under a Hire Purchase Agreement being written off.

The companies that provide these types of agreements is in order to make a profit, if a car is written off the legal agreement is not broken and the motorist is still liable to finish the agreement and pay any balloon payments and literally buy the car they have already they are no longer driving. In addition to this a motorist would also need to find funds for a deposit for a new vehicle. With a Finance Gap Insurance policy, the payout would cover all the outstanding costs and possibly provide adequate funds to put down as a deposit for a new car.

Finance Gap Insurance is often referred to as Leasing Gap or Contract Hire Gap Insurance.
When buying Gap Insurance, it is advisable to choose a policy that doesn’t apply an excess deduction’ or an ‘annual payout reduction’ this means the insurance providers are legally allowed to reduce their payout by a set amount each year of the policies life.

If gap insurance is purchased from a dealership at the same time as buying a car, ensure that in the terms and conditions it states that the payout will go directly to the motorist not to that same dealership, this is an arguably unfair method used by certain companies to ensure the replacement car is purchased from them.