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October 14, 2014

Insuring your novated lease

While everyone has the best of intentions when making any financial commitment, there is always the unknown that can occur to throw the plan off the rails.

With car finance there are several items of risk that can be mitigated by using insurance products. One of the main concerns of drivers when taking out a novated lease is the prospect of losing their job and what happens to the lease repayments. There are several products in the market that can assist with this, but one that StreetFleet uses is Loan Termination Insurance (LTI).

LTI can cover you in the event that you become involuntarily unemployed by making 3 months of lease repayments on your behalf and/or allowing you to hand the car back and having any shortfall (up to the policy limits) paid. This insurance is optional.

The second concern of drivers is what happens if they write the car off in an accident and have a shortfall between the insurance and finance payouts. This is known as the ‘GAP’ and has its own insurance product called, funnily enough, GAP insurance. This can cover a variety of set amounts depending on the policy you choose to take out. This insurance is also optional.

Each novated lease vehicle also must be comprehensively insured in the usual manner – whilst this is compulsory, you have complete choice of through whom you insure.

Note that each person’s situation is different and you should consult each policy’s PDS and your own situation to see if each insurance product is right for you.

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