Imagine this scenario: You have just entered into a new car leasing contract and are enjoying driving your new vehicle. However, disaster strikes and your vehicle is damaged and is classed as a total loss write-off. In this situation, your car does not get fixed and so it is never returned to you. So, what happens now?
In the case of a total loss, you will receive 2 figures. Firstly, your insurance company will give you a total payout based on the market value of your vehicle; this is to cover the cost for the loss of your car. The second figure will come from the finance company with whom your lease is arranged. This will be a settlement figure; the amount you owe them to cover the cost of settling off your financial liability with them..
Due to the way that vehicles depreciate, the figure your insurance company pays for the loss of your car may not be as much as you owe back to your finance company. The gap between the insurance company payout and the settlement figure from the finance company is the figure that the GAP insurance policy will cover you for.
GAP Insurance Example
You may take our GAP insurance and never have to use it, or you may decide the risk is not enough to pay for GAP insurance then regret it if your vehicle is written off as it will be your responsibility to pay the difference between the insurance company payout and the finance company's settlement figure.
Many companies provide GAP insurance products. Rivervale’s Insurance Partner is Auto Protect (MBI) Ltd. The following are all included with Auto Protects GAP Policies;
Many insurers now offer a new for old option. If your car is written off and you accept a new car from your insurer there has been no need to use your GAP insurance. In these cases, the policy can be transferred to your new vehicle providing the new car is within the same vehicle price banding as the original vehicle.
To transfer your policy your new vehicle must have been provided by a motor dealer and you must make the policy transfer request within 7 days of the replacement vehicle purchase.
There are a few exclusions that will affect whether you can make a claim on your GAP insurance policy;
If you decide you have made a mistake and would like to cancel your GAP insurance policy you can receive a full refund if you cancel within 30 days. After 30 days, you can still cancel your policy, but the amount refunded to you will be calculated depending on how many complete months there are remaining on the policy.
You cannot cancel your policy if any claim has been made.
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