Do You Need Gap Insurance on Contract Hire

If you are planning on leasing a car through a contract hire agreement, one question that you may be asking yourself is whether or not you need gap insurance. Gap insurance is designed to cover the difference between the amount you owe on a car and its actual cash value in the event that the car is totaled or stolen. In this article, we will take a closer look at whether or not you need gap insurance on contract hire.

What is Contract Hire?

Before we dive into the details of gap insurance, it`s important to understand what contract hire is. Contract hire is a type of car leasing agreement where you make monthly payments for the use of a vehicle for a set period of time. At the end of the lease, you simply return the car to the leasing company without needing to worry about selling it or trading it in.

Do I Need Gap Insurance on Contract Hire?

The short answer is that it depends on your specific situation. If you are leasing a car through a contract hire agreement, you may want to consider purchasing gap insurance to protect yourself financially in the event that the car is totaled or stolen.

Gap insurance can be particularly useful if you are making a down payment on the car or if you are leasing a car with a high residual value. In these scenarios, you may owe more on the car than it is worth, which means that you could end up owing money to the leasing company if the car is totaled or stolen.

It`s worth noting that some leasing companies may require you to have gap insurance as part of your contract hire agreement. You should carefully read through your lease agreement to determine if gap insurance is required.

How Can I Purchase Gap Insurance?

If you decide that you want to purchase gap insurance for your contract hire agreement, you have a few different options. You can often purchase gap insurance through the leasing company, although you may also be able to purchase it through your own insurance provider.

When purchasing gap insurance, it`s important to compare prices and coverage options from different providers to ensure that you are getting the best deal. You should also make sure that you fully understand the terms and conditions of your gap insurance policy.

Final Thoughts

Overall, whether or not you need gap insurance on contract hire depends on your specific situation. If you are making a down payment on the car or leasing a car with a high residual value, you may want to consider purchasing gap insurance to protect yourself financially in the event that the car is totaled or stolen. As always, it`s important to carefully read through your lease agreement and thoroughly research your insurance options to make an informed decision.

Scroll to Top