What Claim Limit Do I Need?
Choosing a suitable minimum Claim Limit for a Contract Hire GAP insurance policy requires a little calculation. In short, you need to know the total amount of rentals that you are (at the time of purchasing the GAP insurance policy) yet to pay under the Contract Hire Agreement. Thus, we'd follow this process:
- How much is the initial rental payable? (Let's say this is £900)
- How much are your normal monthly rentals and how many do you have to pay? (Let's say these are £300 per month and that you'll be paying 35 of them)
- £900 + (£300 x 35) = £11,400.
In the above example, we'd determine that assuming you'd be liable for 100% of any potential shortfall between the Motor Insurance payout and the settlement figure of your Contract Hire agreeent, you'd need to be looking for a GAP insurance policy with a minimum Claim Limit of £11,400. In our case that means you should consider a policy with at least a £12,500 Claim Limit because the next level down is £10,000 and would be lower than the £11,400 calculated above.
To sum up, tot-up the total value of all rentals due under your Contract Hire Agreement, deduct from that figure the sum of any/all rentals that you've already paid. We then recommend that you choose a GAP insurance policy claim limit of no less than that resulting figure.
If you need any help with this, please do get in touch.