If you’ve never heard of financial loss guarantee in the context of a “classic” car insurance, rest assured, you have not missed out on a guarantee that could have saved you significant sums. It is quite simply that you are not a regular or a follower of the car rental leasing.
On the other hand, if the LOA (rental with option to buy) and the LDD (long-term rental) no longer hold any secrets for you, know everything about financial loss guarantee (also called pecuniary loss insurance or APP) can be of great help to you in the event of damage to your rented vehicle: theft, destruction, fire, etc.
Leasing and financial loss guarantee: a winning duo strongly recommended
But to start (and be sure that we are talking about the same thing), what is it concretely? car leasing ? The principle of leasing is to rent a vehicle for a long time instead of buying it. With, at the end of the day, the possibility of buy back said vehicle at the end of the rental. One way to benefit from a vehicle with an offer including maintenance and rental car insurance.
In the always possible case where the lessee does not wish to purchase the car, he is naturally obliged to return it in the best possible condition, resulting under normal conditions of use.
And this is where the financial loss guarantee can be particularly attractive. Because all motorists know it well: even taking perfect care of your car, you are never safe from an unforeseen event: theft, vandalism, natural disaster, fire, flood … The rented vehicle does not belong to you (by definition), you will therefore have to repair it before returning it to the lessor.
So of course classic insurance will pay part of the repairs or part of the reimbursement of the stolen vehicle. But the expert dispatched by the leasing company will inevitably notice a difference between the value defined by the lessor and the real value observed following the loss.
Difference that you will have to pay out of pocket. For example by having to pay the remaining rent balance due if the car was destroyed or stolen. Hence the clearly understood interest of taking out the famous financial loss guarantee.
An example for the road?
If all this is not really clear to everyone, the easiest way is to take a concrete example. Or an LOA contract evaluating the option to purchase the rented vehicle to 15,000 euros.
Sudden torrential rains (and this scenario is far from a sight of the mind in these troubled weather times, where exceptional episodes follow one another) sweep the vehicle away.
In view of the Argus rating on the day of the accident, the expert dispatched by the lessor’s insurer estimates the value of the car at 11,000 euros. Net financial loss for the tenant: 15,000 euros – 11,000 euros (covered by the insurance) = 4,000 euros.
Without financial loss guarantee, it is therefore the entire difference (ie 4,000 euros in our example) that the tenant will have to pay to his lessor.
Not only will the tenant find himself without a car, not only will he not be able to sign a new leasing contract but, in addition, he will have to pay 4,000 euros to terminate his car insurance contract still in progress despite the disappearance of the vehicle. It is clearer ?
How and when to take out the financial loss guarantee?
As a general rule, the financial loss guarantee is offered by the lessor as soon as the signing of the leasing contract (LOA or LDD). And it is directly integrated into the rents so as to become “painless” for the tenant.
But the financial loss guarantee can also be taken out directly with an “independent” insurance company, without necessarily going through the lessor.
If you are faced with this choice, the easiest is to compare the set of the two propositions, obviously taking into account the possible difference in tariffs, but also by analyzing line by line the various options in play.
In any case, it is important to take care not to duplicate the two insurances (that of the lessor and that of your broker) so as not to burden a budget item already sufficiently substantial.
Compare before deciding to take out your financial loss guarantee!
If you have to lease a car tomorrow with LOA or LDD, you will have understood that it is more than advisable to take out a financial loss guarantee since the first day. But even if it’s more comfortable or faster, don’t take your landlord’s offer at face value.
Without hesitation, use an online car insurance simulation to compare the different car insurance formulas offered by traditional companies. Not all of them offer it, but you can easily perform precise simulations according to your situation and your needs.
If you can’t find the “financial loss guarantee” option, don’t give up! Try with “pecuniary protection insurance”, the other name of financial loss guarantee. You will thus have detailed access to the market’s proposals and you will then be able to choose in full transparency the best price / service / coverage ratio.
At Turbo, we recommend that you use LeLynx.fr. This online auto insurance comparator is free, without obligation and it allows you to perform all possible and imaginable simulations without any restriction, being sure to scan the maximum number of offers available at the moment T.
What is more, LeLynx.fr is totally independent and therefore does not favor no specific insurance. The assurance for you to make the right choice, on your sofa. 24 hours a day, 365 days a year.
Remember: the financial loss guarantee is an insurance option, distinct from conventional auto insurance. It can therefore be the subject of a separate contract, possibly taken out with an insurer different from that proposed / imposed by the lessor. A good opportunity to save some money at equal guarantees or choose a better guarantee for the same price …