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What is Contract Hire Gap Insurance?

If you have just taken a new contract hire or lease vehicle, what can our level of gap insurance do for you?

Contract Hire Gap Insurance is a form of protection that runs alongside your own motor insurance company. This type of insurance ensures you can walk away with no further financial liability if your vehicle is written off. Simply put, it will pay the difference between your own motor insurance settlement and the amount outstanding on the contract hire agreement.

Why Choose Shortfall Contract & Lease Hire Gap insurance?

FCA Regulated & FSCS Backed 

We are regulated by the Financial Conduct Authority to provide and sell policies; the Financial Services Compensation Scheme backs the policies themselves.

Uk Based Customer Service & Claims Teams

All corresponding offices and call centres are based in the UK, whether you call to make a claim or make any policy amendments. 

30-Day Cooling Off Period 

You have a 30-day cooling-off period, within which, if you have not attempted to make a claim, you can cancel your policy and obtain a full refund.

No Policy Administration Fees

We never charge any administration fees for policy administration, whether a change of address or registration change. 

Refund Outside Cooling Off Period 

If you cancel outside of the cooling-off period, provided you have not attempted to make a claim, you are entitled to a pro-rata refund less a cancellation fee.

Contract Hire or Lease Hire, what is the difference? 

In the world of Gap insurance contract hire and lease hire are pretty much the same thing; although there may be tax implications so always speak to your accountant.

The most important aspect from our perspective is whether or not you have the legal right to take full ownership at the end of your finance agreement. If the answer is no, this would be a typical lease or contract hire agreement.

There is a lot of confusion surrounding this form of protection on the internet, even with some dealerships. Some providers may tell you that if the vehicle is declared a total loss, you need to protect the invoice price or P11D value. However, this is not the case. In the event of a total loss, your contract hire company may ask for any outstanding rentals and any potential difference between the valuations, not the invoice price.

They may call it a settlement, they may call it forward and even back rentals, but they are all the same thing.

It is a financial amount you are legally responsible for, over and above your vehicle market value on the day it was written off.

Please remember that your contract hire/lease company will have based your contract hire rentals, not only on how much you were paying each month but also how much they thought they could dispose of your vehicle at the end of your contract. In brief, this means that they will have a monetary amount that they will expect to be able to get back for your vehicle in total.

Imagine your vehicle is written off. In that case, while your own motor insurance company will still pay your contract hire company the market value, the difference between the two amounts is your responsibility.

This is when your Contract Hire Gap Insurance policy would come into play.

Why Buy Shortfall Contract Hire Gap Insurance?

For us, what happens when you make a claim, how you are looked after, and how quickly you are paid are the most important aspects of your policy. But we live in the real world and the price you pay for your policy has to be a consideration.

There are three factual reasons why your local dealership or contract hire company will never be as competitively priced as our quote. 

Economies of scale. Instead of buying just perhaps one or two vehicles. Imagine you were instead buying one hundred thousand. You would expect the same if not better vehicle but at a much lower price. The same applies to Gap Insurance; because of the scale of our business, we can use our buying power to negotiate much better prices.

Commission. None of our team has any financial incentive in arranging a policy for you. Instead, any bonuses paid are based on customer service rates.

Insurance Premium Tax. Because we can not affect the purchase or sale price of your car we are legally allowed to charge a lower rate of insurance premium tax. Currently, the difference between us and another organisation directly involved in the sale of your vehicle is 8%.

So now, let's combine economies of scale, commission, and differences in Insurance Premium Tax. We are sure you will agree that it is easy to see how sometimes massive price differences can happen.

No magic wand, no poor claims experience, no hidden get-out clauses, no dilution of customer service or policy performance. Just taxation, buying power, and commission. Simple!

We think that the price you pay for your contract hire gap insurance is in no way a reflection on the quality of cover you have bought; instead, it is more an indication of where you have bought it from.