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What Is GAP Insurance?

Financial Shortfall GAP

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What is GAP Insurance

So what exactly is GAP Insurance?

Firstly it is not some scam to get more money from our customers, we offer this kind of insurance to protect our customers in the event that their leased vehicle is ever declared a complete write off by their insurance company. Imagine you lease a vehicle and the car or van is stolen. Nightmare scenario as you are left without a vehicle, unless you have a courtesy vehicle included in your own comprehensive insurance policy. But it could get worse! Let us say your insurance company agrees to pay out market value for a used vehicle that is one month old. Depreciation is horrendous in the first year for any vehicle, so you will face a shortfall, insurance company says to you, we are settling this claim at £7500, but you owe the leasing company £15,000 for the remainder of the agreement. Oh Sh*** you think and rightly so. You will still owe what is due on the lease. So what GAP insurance does is this, it fills this GAP and pays the difference. It is as simple as that.

Sample Contract of Insurance

Your Financial Shortfall GAP Insurance will be arranged by Lease2u with UK Underwriting Limited on behalf of: AXA Insurance UK plc, Registered in England No.78950. Registered Office: 5 Old Broad Street, London, EC2N 1AD. MB&G Insurance Services Ltd , UK Underwriting Limited, and AXA Insurance UK plc are authorised and regulated by the Financial Services Authority. This can be checked on the FSA’s register by visiting the FSA’s website at www.fsa.gov.uk/register or by contacting them on 0845 606 1234.


What is Covered

If a Total Loss occurs within the Territorial Limits during the Period of Insurance Your Financial Shortfall GAP Insurance pays the difference between the Insured Value of Your Vehicle and the Outstanding Balance to settle Your Agreement, subject to the Limit of Liability stated on the Policy Schedule (including VAT).

If Your Motor Insurer provides a replacement vehicle in the event of Total Loss, this policy may be transferred to Your new vehicle subject to Our agreement and the agreement of the Company. The transfer of cover is subject to the replacement vehicle meeting the criteria of the policy.

The payment of any benefit is subject to the terms and conditions as set out below



The words or expressions detailed below have the following meaning wherever they appear in this policy and will appear with a capital letter.


MB&G Insurance Services Ltd, Howard House, 21/26 Howard Street, North Shields, Tyne and Wear, NE30 1AR.


The Contract Hire or Lease Agreement taken out in the name of the Insured to Finance the hire of the Vehicle.


The company with whom the Insured has an Agreement.

Consequential Loss

Means indirect loss or damage resulting from the event which caused the claim under this policy

Glass’s Guide

Is a motor trade publication recognised and used extensively throughout the motor vehicle industry to value used vehicles.

 Insurance Settlement

The money that you receive under the Motor Insurance Policy as full and final settlement following a claim for the Total Loss of the Vehicle excluding any excess under Your policy.

Insured Value

The greater of:

a)     The Insurance Settlement (excluding contents but including factory fitted accessories or

b)    The retail Market Value at the date of loss of a motor vehicle which is the same age, mileage, make and model as the insured Vehicle.


The person who entered into the Agreement for the provision of the Vehicle forming the subject matter of this policy.


UK Underwriting Limited on behalf of AXA Insurance UK plc.

Limit of Liability

The maximum amount that can be claimed under this policy as stated on the Policy Schedule.

Market Value

The retail value of the insured Vehicle as determined by reference to Glass’s Guide.

Motor Insurer

An authorised UK insurance company that issued a comprehensive Motor Insurance Policy covering Your Vehicle.

Motor Insurance Policy

A policy providing Comprehensive Motor Insurance in respect of the Vehicle which is effected and kept in force or replaced by a similar Comprehensive Motor Insurance policy for the duration of the Period of Insurance.

Outstanding Balance

The amount calculated as outstanding by the provider of the Agreement at the date of Total Loss including any rebates, or overpayments, but excluding arrears, default or late payment charges or any balloon payments which exceeds that noted in Glass’s Guide to the future residual values at the inception date, road tax, excess mileage charges, maintenance and recoverable VAT.

Period of Insurance

The time between the commencement date of your policy and the earliest of the events noted under the “Termination” section of Your policy.

Policy Schedule

Provides confirmation of: cover, details of the Vehicle, Insured, Period of Insurance, type of policy selected and the Limit of Liability.

Territorial Limits

England, Scotland, Northern Ireland, Wales, Isle of Man and the Channel Islands. The Vehicle is also covered in the European Union, Croatia, Iceland, Norway, Switzerland, Liechtenstein and Andorra for a maximum of 90 days in any 12 months of cover, providing the cover provided by Your Motor Insurer is an equivalent level of cover as You would have enjoyed in the United Kingdom (UK).

Total Loss

Where the ownership of the Vehicle transfer to the Motor Insurer following an Insurance Settlement under the terms of the Motor Insurance Policy.


The Vehicle specified in Your Agreement and shown on Your Policy Schedule with a monthly rental less than £1000 and or retail value in under  £74,999



Your policy will automatically terminate on:

a)         the expiry date stated on the Policy Schedule.

b)         the date on which the insured vehicle is repossessed by or returned to the Hire company;

c)         the date on which the benefit under this policy is paid;

d)         the date on which the insured shall have paid all sums due under the   Agreement or for any     reason ceases to be indebted or

e)         the date you do not pay the premium when it is due, or you cancel any payment


            This policy is non-renewable.


We hope You are happy with the cover this policy provides. However, if after reading Your policy, this insurance does not meet with Your requirements, please return it to the Administrator, within 14 days of issue and We will refund Your premium. Thereafter, You may cancel the policy at anytime however, no refund of premium is available.

The Insurer shall not be bound to accept renewal of any insurance and may at any time cancel any insurance document by sending 14 days notice to the Insured at the Insured’s last known address. Provided the premium has been paid in full the Insured shall be entitled to a proportionate rebate of premium in respect of the unexpired period showing on the insurance.



This insurance does not cover:

a)   Any Vehicle with a monthly rental in excess of £1000 and or retail value in excess of £75,000


b)   In respect of any Total Loss which is not subject of an indemnity under the accidental damage, fire or theft section of the Motor Insurance Policy or which occurs while the Vehicle is being driven or used by a person not covered under a Motor Insurance Policy, used for hire or reward, driving tuition, taxis, racing, pace making, speed testing or reliability trials. Vehicles not listed in Glass’s Guide, kit cars, invalid carriages, taxis, self drive, hire & reward, driving schools, Vehicles used solely for delivery or courier purposes and commercial vehicles of more than 3500kg gross weight. All American, Australian and Canadian vehicles (unless built for the UK market) or is being driven by any person not holding a licence to drive the Vehicle.

c)   In respect of any Total Loss arising during (unless it be proved by the Insured that the loss or damage was not occasioned thereby) or in consequence of war, riot or civil commotion elsewhere in Great Britain, Isle of Man or the Channel Islands.

d)   In respect of any Total Loss by an accident when the driver of the Vehicle is intoxicated by alcohol or under the influence of drugs not prescribed by a registered medical practitioner or drugs prescribed by a registered medical practitioner where a warning against driving has been given.

e)   Any liability in connection with the use or ownership of the Vehicle. 

f)    In respect of any claim whatsoever in the event that the driver of the Vehicle at the time of the incident giving rise to a claim hereunder was driving illegally.

g)   Any Vehicle, which is not covered by a Motor Insurance Policy for the full duration of the Period of Insurance.

h)   Any Vehicle, which is left unattended unless all security devices and immobiliser are activated and are in full working order, (in addition all doors must be locked and keys removed from the Vehicle).

i)    Any costs shown on the Agreement for anything other than the Contract Hire or Lease of the Vehicle. This includes but is not limited to Motor Insurance, maintenance, excess mileage, warranty, payment protection, recovery, accessories fitted other than by the manufacturer or any outstanding finance carried over from a previous credit agreement including “Cash Back”.

j)    Any amount contracted in excess of the Market Value of the Vehicle at the time of entering into the Agreement.

k)   If the insured Vehicle is stolen by any person who has access to the keys of the insured Vehicle.

l)    If the Insured person has the option under their Motor Insurance Policy to replace the Vehicle New for Old following the agreed Total Loss of the Vehicle covered hereunder

m)  If any misrepresentation or concealment is made by or on behalf of the Insured person in obtaining this insurance or in support of any claim there under.

n)   A Total Loss occuring outside of the Territorial Limits.

o)   If either the application details or the premium are not received by the Insurer.

p)   In respect of any excess deducted under the Motor Insurance Policy.

q)   The VAT element of any claim where the Insured is VAT registered.

r)    Where the Total Loss occurred before the Period of Insurance.

s)   Any amount deducted by Your Motor Insurer in respect of but not limited to salvage, wear and tear or pre-existing damage to the Vehicle.

t)    Any claim arising from a Total Loss where You have accepted a replacement Vehicle under the terms offered by Your Motor Insurer.

t)    If the Vehicle has been modified other than in accordance with the manufacturers specification.


General Exclusions

The Insurer will not be liable for any claim for:-

1. Loss or damage caused by or arising from:

     i.   the intentional act or wilful neglect of the Insured,

    ii.   experiments involving the imposition of any abnormal conditions on the insured Vehicle.

2. Loss of use of the insured Vehicle or Consequential Loss of any nature whatsoever.

3. Penalties for delay or detention or in connection with guarantees of performance or efficiency, which is directly or indirectly caused by or is a result of:

a)   earthquake,

b)   war, invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power confiscation, or nationalisation,

c)   riot or civil commotion outside England, Scotland, Wales, the Isle of Man and the Channel Islands.

4. Loss or destruction of or damage to any property whatsoever or any loss or expense whatsoever resulting or arising there from or any Consequential Loss.

5. Any legal liability of whatsoever nature directly or indirectly caused by or contributed to be or arising from ionising radiations or contamination by radioactivity from the combustion of nuclear fuel.

6. For damage caused by pressure waves of an aircraft or other aerial device travelling at sonic or supersonic speed.

7. For liability, which attaches by virtue of an agreement but which would not have attached if the agreement did not exist.


General Conditions

1. Cover is restricted to the confines of the Territorial Limits.

2. Identification – the Terms and Conditions and Policy Schedule will be read as one contract. A word or expression to which a specific meaning has been attached will keep the same meaning wherever it appears unless specifically stated otherwise. A particular word or phrase, which is not defined, will have its ordinary meaning.

3. Non Disclosure, Misrepresentation or Misdescription – this policy is voidable if You or anyone acting for You fails to disclose, misrepresents or misdescribes any material fact. If the Insurer voids this policy they will void it in its entirety and no cover will apply.

4. Fraud – the Insurer will void this policy in its entirety from the date of loss or alleged loss and no cover provided will apply if:-       

(a) a claim made by You or anyone acting on Your behalf to obtain any benefit is fraudulent or intentionally exaggerated;


(b) a false declaration or statement is made in support of a claim under this policy.

5. Subrogation – the Insurer may at their own expense take such proceedings as they think fit in the name of the Insured to enforce any rights and remedies against or obtain relief or indemnity from other parties to which the Insurer shall be or may become entitled or subrogated under this policy and the Insured shall at the request and expense of the Insurer do such acts and things as may be reasonably required by the Insurer for that purpose.

6. Arbitration Procedure – if the Insurer accepts Your claim but disagrees with the amount due to You, the matter will be passed to a legally appointed arbitrator. When this happens, an award must be made before proceedings can be started against Us.

7. Observance of policy terms – it is a condition precedent to Our liability that You and anyone claiming indemnity has complied with the Terms and Conditions of this policy.

8. This policy shall be governed by and construed in accordance with the Law of England and Wales unless the Insureds’ habitual residence (in the case of an individual) or central administration and/or place of establishment is located in Scotland in which case the law of Scotland shall apply.

9. Contribution – if at any time of any loss or damage arising under this policy there is another insurance policy covering such loss or damage, the Insurer will not be liable for more than their rateable proportion.

10. Limit of Liability – in the event of a claim payment as a consequence of any insured event the Insurer will deem that full liability has been met under the terms of this policy and the insurance cover will cease upon settlement. In no circumstances shall the liability of the Insurer exceed Limit of Liability shown in the Policy Schedule.

11. Premium – the premium is not refundable once the 14-day cooling off period has expired.

12. Claims – the Insurer shall not be liable for any claim arising directly or indirectly caused by or contributed by or in consequence of a loss listed under the heading “Exclusions” or “General Exclusions”.

13. No agent is authorised to alter or amend this policy to waive any conditions or restrictions contained therein, to extend the time for paying a premium, or to bind the Insurer by making any promises or representations or by giving or receiving information. This policy cannot be varied, altered or its contents waived in any respect unless by written agreement endorsed thereon or by the driver attached thereto, and signed by an authorised Official of the Insurer.


Specific Conditions

Eligibility Requirements

The insurance hereunder is subject to the Insured being insured under a Motor Insurance Policy, or International Motor Insurance Card (Green Card), effective at the date of Total Loss.

Best Endeavours

The Insured shall, prior to the acceptance of any claim hereunder, demonstrate to the satisfaction of the Insurer that they have used their best endeavours to obtain the maximum settlement under their Motor Insurance Policy. If the Insured accepts an offer of settlement from their Motor Insurer of less than the current Market Value of the Vehicle then the Insurer reserves the right to calculate the loss at the current Market Value of the Vehicle according to Glass’s Guide or a similar publication at the time of the loss.


The Insured person shall not be entitled to assign any of their rights hereunder unless agreed by the Insurer.

Claims Conditions

In the event of any loss or damage, which may give rise to a claim the Insured or their legal personal representative must at their own expense:

    i.   Supply all information and assistance, which the Insurer may reasonably require in establishing the amount of any payment under this insurance.

   ii.   Notify the police of any loss or damage by theft within 24 hours or as soon as reasonably possible.

  iii.   Written notice of the facts on which the claim is based, to be provided to the Insurer within 30 days of the date of the Total Loss.


How to Claim

In the event of a possible claim under this policy please follow the claims procedure set out below with written notice of the facts on which the claim is based, to be provided to the Administrator within 30 days of the date of the loss. If such notice should not be given within such period or any extension agreed by the Insurer, no payment under this policy will be granted.

Claims Procedure

Contact the Administrator immediately in writing at:

MB&G Insurance Services Ltd, Howard House, 21/26 Howard Street, North Shields, Tyne and Wear, NE30 1AR .

or by telephoning 0191 259 6378 with the following information:-

• Your name, address and postcode
• a daytime contact telephone number
• the policy reference number
• details of the Vehicle

We will then advise You how to proceed with Your claim. Please quote Your policy number in all correspondence.

UK Underwriting Limited are an insurers agent and in the matters of a claim act on behalf of the Insurer.

Compensation Scheme

AXA Insurance UK plc is covered by the Financial Services Compensation Scheme (FSCS). You may be entitled to compensation from the scheme, if they cannot meet their obligations. This depends on the type of business and the circumstances of the claim. Most insurance contracts are covered for 100% of the first £2,000 and 90% of the remainder of the claim. You can get more information about the compensation scheme arrangements from the FSCS or visit www.fscs.org.uk

Data Protection Act 1998

Please note that any information provided to Us will be processed by Us and Our agents in compliance with the provisions of the Data Protection Act 1998, for the purpose of providing insurance and handling claims, if any, which may necessitate providing such information to third parties.

Customer Service / Complaints

It is Our intention to give You the best possible service but if You do have questions or concerns about this insurance or the handling of a claim You should in the first instance contact the Managing Director of the Administrator. The contact details are:

Please ensure Your policy number is quoted in all correspondence to assist a quick and efficient response.

In the event You remain dissatisfied and wish to make a complaint, You can do so by contacting the following:

The Head of Claims,
UK Underwriting Limited,

2 Gibraltar House,

Bowcliffe Road,

LS10 1HB.


If it is impossible to reach an agreement, You have the right to make an appeal to the Financial Ombudsman Service, this also applies if You are insured in a business capacity but have a group annual turnover of less than £1 million, or are a charity with an annual income of less than £1 million, or are a trustee of a trust with a net asset value of less than £1 million, You may contact the Financial Ombudsman Service at:

The Financial Ombudsman Service,
South Quay Plaza,
183 Marsh Wall, Docklands,
London, E14 9SR,
Tel: 0845 080 1800

Your statutory rights are not affected if You choose to follow the complaints procedure above.  For further information about Your statutory rights contact Your local authority Trading Standards Service or Citizens Advice Bureau.

Van Leasing


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