It is the hirer not the car leasing company that is responsible for ensuring that a contract hire car is insured and simply taking out a comprehensive policy is not enough; if the information you have supplied is not accurate you can find yourself without insurance, just when you most need it. You do also need to inform the insurer that it is a lease car you are insuring.
Most forms of insurance require you to declare material facts. This can mean that even if you have answered all the questions on the insurance application form accurately, you may still not have done enough; you have a duty to tell them of anything that may be relevant and could affect how they view your application.
Should things change once you are insured; if for example you were convicted of a motoring offence, you are safer to tell the insurance company. Many motorists genuinely forget to tell their insurers when there are changes but whether the omission is a genuine error or intentional, the end result is likely to be the same.
The most common changes that occur are changing your address or occupation. The insurance company must also be informed of a change in your health that could affect your driving ability, or any modification that is made to the vehicle after the insurance was initially taken out. Many motorists change their wheels and tyre size without informing their insurers, which can be risky if they do not comply with the manufacturer’s specification.
If there is a claim much depends on the type and seriousness of the accident as to what the insurance company’s inspectors will look at; if another vehicle drives into the back of your car, they know the claim is going to go against the third party, so they have no real incentive to examine the road worthiness of your vehicle. If however you lost control of your car on a bend, then they may well look at, amongst other things, the type and condition of you tyres. An insurance company’s ultimate responsibility is to its shareholders not the insured.
If your vehicle is written off, this can prove a problem if it is a lease car; because in these circumstances, it is treated by the contract hire company as an early termination and as such you are liable to penalties. Taking out GAP insurance is one way of avoiding this liability.
There is a form of GAP insurance called Return to Invoice (RTI) which can take care of this shortfall in the event of a lease car being written off. This insurance will cover the gap between the original invoice price of the vehicle and the current market value, the difference between the two will normally provide sufficient funds to pay the car leasing company’s early termination penalty charge, which is your liability.
Insurance policies of any type rarely cover negligence, so never leave your keys in the car. If you do and it is stolen, the insurance company will refuse to pay out, as they usually will if you have an accident whilst in excess of the legal alcohol limit or under the influence of drugs.
Many motorists do not complete their application forms honestly and the insurers are aware that this happens. They do not however do anything about it until such time that there is a serious accident, and then everything comes under scrutiny, including your original application.
On occasions insurance companies do repudiate claims that should be paid, so if in doubt you can refer your case to The Insurance Ombudsman who will look at the case in an unbiased fashion.
When an insurer doesn’t pay out after a car has been written off, it generally creates a serious financial problem for the motorist. A problem made much worse if it is a contract hire car; the car leasing company will expect the current market value of the car and the appropriate early termination penalty. Whatever the temptation, it can never really be worth providing misleading or incorrect information to an insurance company.
Should you have any queries or questions with regard to Fleet Management, Licence checking, Contract Hire, Personal Contract Hire, Lease Purchase or vehicle Hire Purchase, please do not hesitate to contact us. Bowater Price plc 01494 536 536. www.bowaterprice.com.
