When leasing a hire car, it is the responsibility of the hirer to make sure it is insured properly, and not the responsibility of the car leasing company. This basically means that taking out fully comprehensive insurance is the duty of the hirer, and they must also accurately answer any questions and declare all material facts.

Most types of insurance, even household insurance will state that you must declare what they call material facts. This basically means that you have to let them know anything that you think may influence their decision.

Several motorists will change thie occupation or address and just forget to update their information; this can make a huge difference to your policy (moving into an area with a higher crime rate for example) and is something you need to tell your insurer. Modifying a vehicle without advising the insurance company can also give the insurance company a reason to decline a claim, be it simply fitting tyres or wheels that are not standard.

If a vehicle is written off, the insurer’s standard practise would be to pay out the current value of the written off vehicle, allowing you to purchase a new one. If however the vehicle is leased, you will have in effect terminated your agreement early and will be liable to early settlement penalties. This liability can be avoided by taking out GAP insurance.

The most effective type of GAP insurance is know as RTI, or Return To Invoice. The insurers will pay out to the leasing company if the car is written off (with the full market value of the vehicle) but won’t cover the penalties due. RTI insurance will provide the hirer with the funds needed to settle penalties by paying out the difference between the current market value and the original invoice price of the vehicle.

Often the insurance company underwriters will attempt to deny a claim that should have been approved. If you feel this is the case you can have it referred to the Insurance Ombudsman; most insurers accept the ombudsman’s decision as final.

Motorists can be dealt a huge financial blow if the insurance company decides to decline their claim, particularly for a car that’s been written off. The problem is even worse for lease cars; you will end up liable not only for the market value of the car but also for ending your lease agreement early. Obviously this could end up particularly expensive if you’ve taken out a van contract hire, or other expensive or commercial vehicles. It’s probably advisable then to make sure you accurately input all your information when taking out vehicle insurance – you don’t want to give the insurance company any reason to decline your claim?