An Easy Tor Read, Explanatory Article on, "What Is Finance Gap In…

The trouble with any form of Gap Insurance is that drivers are simply unaware of how important it is. This easy to read explanatory article has been written to help you to understand the importance of Finance Gap Insurance, avoiding the stereotypical insurance jargon.

Finance Gap Insurance, also known as Contract Hire Gap Insurance only applies to a means which has been bought under a financial agreement, such as, contract hire, hire buy or a lease buy.

In the most simplistic explanation, Finance Gap Insurance is designed to allow the driver to walk away from a finance agreement with no liability if in the unfortunate case the means is written off. When taking out a finance agreement for a means, the only concern the driver involved has is ultimately paying the agreement off after the end of the agreed period.

When taking out a finance agreement, the majority of drivers are unaware that if in the unfortunate case the means is written off, already if it by no fault of their own, they are nevertheless responsible for paying off the agreement.

For illustration purposes, Barry has bought a Honda Civic under a finance agreement which requires Barry to pay £200 for the next 24 months. However as a consequence of poor motorway maintenance, 12 months down the line, Barry is involved in an incident which writes his means off, but thankfully leaves him unhurt.

So Barry is in theory nevertheless liable for 12 months of £200 payments, totaling £2400. Barry’s comprehensive insurer pays him £1200, leaving the noticeable £1200 nevertheless under Barry’s liability.

This is where Finance Gap Insurance comes into play. This policy would essentially pay Barry the remaining £1200.

Barry is now free from any financial liability.

Please observe: Finance Gap does not reimburse any financial penalties which are as a consequence of late payments that occurred before your means was written off.

Please observe: Finance Gap cannot protect a loan shortfall if the agreement is not connected to a means. For example, if it is instead connected to a Bank or a Personal Loan.

Please observe: If your finance agreement involved you paying a large place, or if instead you paid for your means by cash, this form of Gap Insurance is not for you.

Please consider Return to Invoice (RTI) or means substitute Gap Insurance.

Again in the most simplistic terms:

Return to Invoice returns you to the original invoice price you paid for your means if in the unfortunate case your means is written off. If your comprehensive insurer pays you £10,000 and you originally paid £20,000 for your means, then this policy would bridge the gap and pay you the noticeable £10,000.

means substitute replaces your means if in the unfortunate case your means is written off. If you paid an invoice price of £20,000, and are informed that it has increased to £25,000, and your comprehensive insurer only pays you the £10,000, then means substitute would pay you the noticeable £15,000 you need to buy a means of the same age, mileage, condition as you originally bought.

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