Buying your car outright can be a rather expensive experience and so there is no shock that many more people are choosing to lease or purchase their vehicles through finance or contract hire. This allows people to acquire the vehicle they desire, without the whole amount of money being expected of them straight away. Paying your Kia off at monthly intervals, or hiring it for a fraction of it’s retail value per month, allows buyers and leasers to be able to spread their finances easily, in a way that is convenient to them.
If you were to unfortunately find yourself the subject of car theft and therefore your car was declared a total loss or if you happened to be involved in an accident in which your car was written off, then there is a bit more for you to consider than the events you have already been through. If you did acquire your Kia through finance or contract hire, then regardless of the circumstances, the company will still expect to be paid the outstanding balance that is owed to them.
So what would Contract Hire Gap Insurance for your Kia do?
Not a lot of people seem to be aware of the fact that if you do unfortunately find yourself to be the victim of vehicle theft, or you are involved in an accident and your car is declared a total loss, then your motor insurance will only pay your hire company, the valuation of your vehicle on the day it was declared a write off. Due to depreciation, this amount is going to be a significant amount lower than what your car was originally worth, potentially leaving you thousands of pounds out of pocket and owing to your hire company. Contract Hire Gap Insurance, would pay the difference between your motor insurers valuation (that has been awarded to the hire company) and the amount that remains outstanding.
Lets look at an example of Contract Hire Gap Insurance for your Kia?
Lets say that you acquired a Kia Picanto with an original retail value of £8,045, imagine that you are unfortunately involved in an accident two years later, according to whatcar.com’s depreciation calculator, your car would now have a valuation of £4,300, this has dropped in value by almost 1/2. This is therefore the amount that would be paid to your contract hire or finance company by your motor insurer. This of course will leave you with an outstanding balance that is owed to the company. Whatever this outstanding amount is, will then be topped up by your Contract Hire Gap Insurance. This could quite literally be the difference between thousands of pounds. Please do not leave yourself exposed. Remember that if you can eventually own your vehicle and it is not just being hired, then you could also explore Vehicle Replacement Gap Insurance and Return to Invoice Gap Insurance. More on Contract Hire Gap Insurance?