GAP Insurance – What is it and do I need it?
Minibus Leasing Gap Insurance is an insurance policy that covers the difference between what is owed on a Minibus, and the amount that your insurance company will pay out, in the event that the Minibus is written off or stolen.
It is an important consideration for anyone thinking of leasing a Minibus.
How does Minibus Leasing Gap Insurance work?
If your lease Minibus were to be written off or stolen (and not recovered) during your contract period, you would have to settle the finance agreement with your leasing company, who will provide you with a settlement figure.
However, you may not realise that your insurance company will only pay out the current market value of your Minibus at the time of the loss, and there is a risk that this figure will be less than what you owe to the finance company. The difference could be as much as a few thousand pounds, and Minibus Leasing Gap Insurance protects you against this eventuality.
This situation can arise because vehicles tend to depreciate more quickly in their first year, and then at a slower rate as they get older.
This does not just apply to Minibus Leasing, but could be equally applicable if you had chosen to finance your Minibus on Hire Purchase. So don’t be put off leasing a Minibus because of this. See our sections on Leasing A Minibus vs Buying A Minibus and Benefits of Leasing A Minibus.
Do I need Minibus Gap Insurance?
With Minibus Leasing, it’s important to consider Gap Insurance.
Minibus Leasing Gap Insurance is an optional leasing insurance product which is not part of your normal vehicle insurance policy. So, the ‘fully comprehensive’ insurance policy you took out on your lease Minibus (required on all lease vehicles) does not include Gap Insurance.
Like any insurance product, Gap Insurance is designed to protect you from a potential future risk that may or may not happen. If you did find yourself in the unfortunate situation of having your Minibus written off or stolen, your Gap Insurance policy could save you thousands of pounds.
Minibus Leasing Insurance
It is necessary for your lease Minibus to have fully comprehensive Motor Insurance, because you are effectively driving someone else’s vehicle. ‘Third Party’ and ‘Third Party, Fire & Theft’ policies are not acceptable to leasing companies.
Not all insurance companies will insure lease vehicles, as some will only insure you if you are the ‘registered owner’ of the vehicle. In the case of a lease vehicle, the leasing company is the registered owner while you are the ‘registered keeper’.
Although this may make finding competitive vehicle leasing insurance a little harder, you should still be able to find the best quote by using a comparison website. Also, there are a number of specialist motor insurers in the market who offer business leasing insurance for your new leased Minibus.
Credit Protection Insurance
Credit Protection Insurance is an insurance policy that offers you payment protection if you are unable to continue making payments to your leasing company for your lease vehicle.
If your personal circumstances suddenly change, you may find yourself under serious financial pressure at a difficult time, and Credit Protection Insurance could help to alleviate the situation.
Credit Protection Insurance usually covers your Minibus leasing payments in the following situations:-
- If you are unfit to work due to an accident or sickness
- The outstanding finance is usually settled if you fall critically ill
- Your payments are covered for a certain period if you are made redundant
- The outstanding finance would usually be settled if you were to die
Please note that the above information is just meant to give you a general guide to the insurance products mentioned, and you should make your own enquiries to insurance providers in order for you to decide whether any of these products are right for you.
We can provide you with GAP Insurance to go with your Minibus Leasing Contract if you wish – the choice is yours!