Gap insurance on leased car

WSforever

I'm looking at leasing a car on a personal contract hire basis.
I've been offered gap insurance but I'm assuming I don't need it for a leased vehicle?

I'm guessing that gap insurance is only relevant for personal contract purchase to cover the remaining finance if the vehicle suffers a loss.

Whereas with a hire/lease deal this wouldn't be needed as there's no finance due on me.

Any advice?

Nearlyold

Gap insurance is relevant to PCP and straightforward HP and cars not on finance. You can also get Gap specifically for Contract Hire /Lease. You need to check the terms of the Contract Hire /Lease Agreement, if the car is a write off you would usually find yourself liable for at least the remainder of the payments you were due to make.

Not really clear what you mean by "no finance due on me" you are still entering into a "finance agreement" just not one to buy the car. You can't just write off the car and walk away with no further liability.

WSforever

Ok but let's say, the car was written off in month 5 of a 3-year lease, I understand that I'd be liable to pay the remaining 30 months lease payments, but surely an orthodox insurance policy payout would cover that amount so meaning I don't need Gap insurance?

Nearlyold

The problem is you would have been due to hand the car back at the end of the hire period but no longer have a car to hand back. The finance company would want compensation for the lost value of the car at the end of the hire period - this could still amount to a few thousand.
You need to look carefully at the terms and conditions of your contract.
I'm not saying you have to buy GAP insurance you just need to weigh up the risks with a full understanding of what could go wrong.

I seem to remember there was a thread in the last few months where the poster had found himself in difficulties with a contract car that was written off. Obviously if the write off value of the car was more than or equal to the amount due to the finance company you wouldn't have a problem but GAP covers the situation when the write off value is lower than the amount due to the finance company.