Covering a GAP in the market – Insurance for Business Fleets
In September 2015, the Financial Conduct Authority (FCA) introduced new legislation designed to change the face of GAP insurance for drivers and create a more competitive market for insurance providers. We recently advised about the flexibility this gave car owners to shop around for more reasonable GAP cover (the difference between what your insurer pays out and what was originally paid for the car, if your vehicle is stolen or damaged) – but what about GAP for business fleets?
The Finance & Leasing Association has recently reported that 80% of businesses now have vehicles which operate under a leasing agreement – a huge increase from just 40% in 2009. Increasing costs and the so-called ‘on-demand economy’ mean that businesses are constantly having to review, replace and expand their fleets with different vehicles to suit their customer’s needs – making leasing a more economic and viable option.
With leasing, however, does come some insurance considerations for business owners, to ensure you are not left out of pocket by hidden costs.
Nick Mohan, Joint Managing Director at Jackson Lee Underwriting, explains: “With more and more companies wanting long term leases on a wide range of vehicles, the risk of damage or total loss increases. Sadly, the depreciation of a new car or van is extremely high - its value drops by 20 percent (VAT) as soon as you drive away from the dealership and continues to depreciate over the duration of ownership. This means if the leased vehicle is affected by vandalism, theft or flood, or even completely totalled – the business owner could face hefty contract termination charges to cover the outstanding lease contract.
“In some cases, there is no cap on early termination charges and a total loss can result in lenders applying stringent terms to their customers, leaving them with a large financial short fall which could impact their company. It’s essential to bridge the gap between the insurer's total loss settlement and the outstanding finance liability and protect yourself against the early termination charge that may catch you off guard. A comprehensive GAP policy can help with all of these eventualities.”
Bryan Banbury, Managing Director at Russell Scanlan, commented: “The Fleet GAP scheme at Jackson Lee is an example of the growing number of solutions for everyday insurance troubles for businesses in the UK.
“With the new legislation in place from the FCA, customers no longer need to go to their dealers for expensive GAP policies, they can now shop around for policies which offer personalised cover for the type of fleet they operate. It is clear that people still need to learn about the rules which enable them to find more cost-efficient options out there for their business.”
Available for cars, vans, trucks and even agricultural vehicles up to 44 tonnes, Fleet GAP is a simple way to protect the fleet behind any business operation. With more and more products becoming available to help business owners protect their assets, it may be time to reassess your insurance needs. An insurance broker will be able to provide advice on the best levels of cover to suit your business and offer a personalised service that matches your specific needs.
For more information about fleet insurance, contact a member of our team on: 0115 9838837.