Car Leasing GAP Insurance- Do I Need It?
by Jim Peplinski Posted on Monday, May 20, 2019
Do you need GAP insurance when considering vehicle leasing in Calgary for livery vehicles?
Vehicle insurance is supposed to provide peace of mind in case of theft, collision or other potential claims. Why then is there so much stress involved when it comes to ensuring you have the right insurance for your leased vehicles? That’s especially true when you’re leasing a livery vehicle. High mileage and additional liability requirements can make choosing the right insurance difficult. Understanding some of the options available, like Guaranteed Asset Protection insurance can help give you better peace of mind.
Gap insurance for leased commercial limousines, taxis and accessible vehicles is not mandatory; however, it does provide coverage for the difference between how much you owe on your vehicle lease and how much it is worth at the time of an accident that causes a total loss. Limos often have a significant deficit between the value of the asset and the amount owing on the lease, due mostly to the high kilometres GTA livery services can rack up. Gap insurance protects vehicle lease holders from having to pay out of pocket the amount owing to the leasing company or lender. With more companies choosing to lease livery vehicles rather than buy them, GAP insurance becomes a smart option; when your company does not own vehicles outright as is the case with a lease, GAP insurance provides a layer of protection to make sure the debt is fully paid and contractual obligations under a lease are covered in the event your livery vehicle is written off in an accident. When working with vehicle leasing companies to secure vehicles for your fleet, it’s important to discuss GAP insurance options available. This is an exclusive service provided by Jim Peplinski Leasing.
How does GAP insurance work when leasing vehicles from commercial vehicle leasing companies? When it comes to a leased vehicle, the fleet insurance policy your company has should cover the depreciated market value of a vehicle at the time of an accident. In most cases, the market value of a leased vehicle is much lower than what is still owed on the lease contract thanks to depreciation. However, your company would still be responsible for the difference in terms of what the insurance company will pay for any claim and the amount owing on the lease – that number amounts to the “gap” your gap insurance is designed to pay for.
What you owe in your lease agreement minus the insurance company payout is the amount owed to your vehicle leasing company. It could wind up being a significant amount of money, which is why GAP insurance is always a smart idea when working with vehicle leasing companies. Jim Peplinski Leasing is an expert when it comes to leasing livery vehicles provides incredible livery vehicle options, including the Lexus ES350H, the Highlander Hybrid, and standard SUV livery vehicles including the GMC Yukon, Escalade and expedition.