Leasing can be a simple way to get behind the wheel of a new Toyota. You choose your car, agree how long you want it for, set an annual mileage allowance and make monthly rental payments. At the end of the agreement, you hand the Toyota back.
No worrying about selling it. No wondering how much it will be worth in three years. And No awkward conversation with someone offering £4,000 below the asking price because they have “cash ready today”. But there is still something worth thinking about.
What happens to the lease agreement if your Toyota is written off or stolen and not recovered halfway through the contract? Your comprehensive motor insurer may pay the market value of the Toyota. But that settlement could be lower than the amount needed to settle the eligible lease liability.
Toyota lease GAP insurance is designed to help with that potential financial shortfall, subject to the policy terms, exclusions and Maximum Benefit.
What Is Toyota Lease GAP Insurance?
Toyota lease GAP insurance is a type of GAP cover designed for an eligible Toyota funded through a lease or contract hire agreement. Unlike Return to Invoice GAP insurance, the purpose is not to take you back to the original purchase price of the car.
After all, you did not buy it. Instead, Contract Hire and Lease GAP focuses on the possible difference between: the settlement paid by your comprehensive motor insurer and the remaining eligible liability under your lease agreement
If your Toyota is declared a total loss and there is a shortfall between those figures, your GAP policy may help cover the eligible difference up to the Maximum Benefit stated in your policy schedule.
How Does Leasing a Toyota Work?
You choose the Toyota you want to lease, agree the length of the contract and estimate the annual mileage you expect to cover. You then make an initial rental followed by fixed monthly rental payments. At the end of the agreement, the car is returned rather than becoming yours.
That last point is important when explaining lease GAP insurance. With a leased Toyota, you are paying to use the car for the agreed period. You are not gradually buying it through your monthly payments.
Toyota also states that because the vehicle remains owned by KINTO UK Limited under its current PCH arrangements, the normal depreciation risk associated with owning and later selling the car sits with the leasing company. However, that does not mean a financial shortfall can never arise if the vehicle becomes a total loss during the lease.
How Does Toyota Lease GAP Insurance Work After a Write-Off?
Putting some numbers on it makes things much easier. Suppose you lease a Toyota and it is involved in a serious accident halfway through your agreement. Your comprehensive motor insurer declares the car a total loss.
For this example:
- Motor insurance settlement: £21,000
- Remaining eligible lease liability: £24,000
- Potential shortfall: £3,000
The comprehensive motor insurer has paid £21,000 based on the insured value of the vehicle, but there is still a £3,000 difference between that amount and the eligible figure required under the lease agreement.
Subject to the policy terms, Toyota lease GAP insurance may help cover that £3,000 shortfall. The figures above are purely an example. An actual claim would depend on the settlement offered by your comprehensive motor insurer, the eligible lease liability, your policy terms and the Maximum Benefit shown in your schedule.
Why Can There Be a Shortfall on a Toyota Lease?
You might reasonably be thinking: “Hang on, I don’t own the Toyota, so why does depreciation matter to me?” It is a fair question. With Personal Contract Hire, you do not personally take the usual resale risk associated with owning a depreciating car. Toyota confirms this within its own PCH information.
The issue for GAP insurance is slightly different. If the Toyota becomes a total loss before the lease has ended, your comprehensive motor insurer will deal with the insured vehicle. Separately, there is the lease agreement attached to it.
Those two figures do not necessarily match. Contract Hire GAP insurance is designed specifically to help where a comprehensive motor insurance settlement is lower than the remaining eligible liability on a lease or contract hire agreement. That difference is the GAP bit doing what it says on the tin.
What Can Toyota Lease GAP Insurance Cover?
Subject to the policy terms, Toyota lease GAP insurance may cover an eligible shortfall following a total loss.
This could apply if your leased Toyota is:
- stolen and not recovered
- seriously damaged and declared a total loss by your comprehensive motor insurer
The policy may then respond to the eligible difference between the comprehensive motor insurance settlement and the amount required to settle the relevant lease liability. Contract Hire GAP cover can apply to eligible passenger cars and light commercial vehicles, with Toyota listed among the vehicle brands for which Insureworks can arrange GAP cover.
The amount payable is limited by the Maximum Benefit shown in the policy schedule. It is important to check that figure before taking out cover.
What Doesn’t Toyota Lease GAP Insurance Cover?
Lease GAP insurance is not designed to cover every cost that could appear on a leasing account. Under the current Contract Hire GAP terms, excluded costs can include:
- missed payments
- arrears
- interest on arrears
- excess mileage charges
- maintenance charges
- costs unrelated to the eligible finance agreement
- certain finance fees
Other exclusions also apply under the policy wording. The excess mileage point is particularly worth remembering.
Toyota PCH agreements include an agreed annual mileage allowance, and additional charges may apply if you exceed it. GAP insurance is not your get-out-of-jail-free card because those weekend drives somehow added another 8,000 miles to the clock.
Does Toyota Lease GAP Insurance Cover Wear and Tear Charges?
Contract Hire GAP insurance is concerned with the eligible financial shortfall following a total loss, rather than the everyday costs and obligations attached to looking after a leased vehicle.
Toyota states that PCH vehicles must be maintained in line with manufacturer requirements. When the car is returned, its condition is also assessed, and charges may apply for damage outside accepted fair wear and tear standards.
These sorts of charges should not be confused with the lease liability covered by GAP insurance. That is why checking the policy wording matters. Two costs can appear on the same leasing account without both being covered by the same insurance.
Do You Need Toyota Lease GAP Insurance?
No. GAP insurance is not a legal requirement. Whether you decide it is appropriate depends on your own circumstances and the details of your lease.
One useful question to ask is: If my Toyota became a total loss and there was a financial shortfall, would I be comfortable paying that amount myself? Some drivers may have enough savings available that an unexpected shortfall would not cause them much difficulty.
Others may prefer to pay for additional cover rather than accept that financial risk themselves. You should also consider the potential size of the shortfall, the cost of the GAP policy, its Maximum Benefit, exclusions and eligibility requirements.
Insureworks distributes GAP insurance on a non-advised basis. This means the information provided can help you understand the policy, but the decision about whether it meets your needs remains yours.
Toyota Lease GAP Insurance FAQs
What is Toyota lease GAP insurance?
Toyota lease GAP insurance is designed for an eligible Toyota funded through a lease or contract hire agreement. If the vehicle becomes a total loss and the comprehensive motor insurance settlement is lower than the remaining eligible lease liability, the GAP policy may cover the eligible difference up to the Maximum Benefit stated in the policy schedule.
Can I get GAP insurance on a leased Toyota?
Potentially, yes. Insureworks offers Contract Hire GAP insurance for eligible vehicles on lease or contract hire agreements, and Toyota is currently included among the vehicle brands for which Insureworks can arrange GAP cover. Eligibility requirements, exclusions and policy limits apply.
Does Toyota lease GAP insurance pay the original price of the car?
No. Contract Hire and Lease GAP is different from Return to Invoice GAP. You have leased the Toyota rather than bought it, so the policy is designed around an eligible shortfall connected with the lease agreement. It does not cover the original invoice price or purchase cost.
Does Toyota lease GAP insurance cover excess mileage?
No. Excess mileage charges are excluded under the current Contract Hire GAP information published by Insureworks. Toyota also confirms that its Personal Contract Hire agreements include an agreed mileage allowance and that additional charges can apply if it is exceeded.
What happens if my leased Toyota is stolen?
If the Toyota is stolen and not recovered, your comprehensive motor insurer may treat the vehicle as a total loss. Subject to the policy terms, Toyota lease GAP insurance may then help cover an eligible shortfall between the comprehensive motor insurance settlement and the remaining eligible lease liability.
Does lease GAP insurance cover missed Toyota payments?
No. Missed payments, arrears and interest on arrears are among the costs excluded under Insureworks’ current Contract Hire GAP information.
Do I need comprehensive insurance as well as lease GAP insurance?
Yes. GAP insurance works alongside comprehensive motor insurance rather than replacing it. Insureworks states that a comprehensive motor insurance policy must be kept in place throughout the Contract Hire GAP policy period.
Is Toyota lease GAP insurance the same as PCP GAP insurance?
No. Personal Contract Hire is a lease arrangement where you do not own the Toyota and return it at the end of the agreed term. Toyota PCP is a finance agreement where you make monthly repayments and have different options at the end, including potentially making a final payment to own the vehicle.
The appropriate type of GAP cover can therefore differ.
GAP Insurance Expert Comment
“Lease GAP insurance deals with a very specific risk. The customer does not own the car, but there can still be an eligible financial difference if the vehicle becomes a total loss before the lease ends. Looking at the motor insurer’s settlement alongside the remaining lease liability can help customers understand why that shortfall could arise.”
Nick Rinylo, Insurance Specialist at Insureworks
Looking for Toyota Lease GAP Insurance?
Leasing means you can hand the Toyota back at the end rather than worrying about selling it yourself. Unfortunately, a write-off does not always have the decency to wait until the contract finishes.
Toyota lease GAP insurance may help cover an eligible financial shortfall if your leased vehicle becomes a total loss, subject to the terms, exclusions and Maximum Benefit of the policy.
Insureworks can arrange Contract Hire GAP insurance for eligible Toyota vehicles through specialist insurers. Check the policy information, understand the possible shortfall and decide whether the cover meets your needs. Get a Toyota GAP insurance quote online today.