Gap Insurance A Financial Safety Belt

Gap Insurance A Financial Safety Belt

Gap Insurance: a​ Financial Safety Belt
Why is​ gap insurance considered as​ a​ financial safety belt? Simply put,​ it​ keeps you​ from being financially ruined when disaster hits your car .​
For example you​ are in​ this situation,​ you​ bought a​ late-model car three months ago using a​ car loan with a​ regular car insurance .​
The car costs $30,​000 and you​ have already made three payments of​ $900 each month .​
Then,​ disaster strikes .​
An electric post falls and slams down on​ your car .​
The car was flattened to​ half its height .​
Immediately,​ you​ reported it​ to​ the​ auto insurance company,​ which they in​ turn play with numbers,​ mileage,​ depreciation,​ market values,​ and other related stuff .​
After a​ couple of​ days,​ the​ adjustor informs you​ that the​ worth of​ your car at​ the​ time of​ the​ accident is​ $25,​000 .​
This is​ the​ amount that the​ auto insurance company will provide you​ .​
But the​ finance company that gave you​ the​ loan will still consider the​ car to​ be worth its original price .​
They also play with numbers,​ interest rates,​ taxes and license fees .​
Then they come up with the​ amount of​ $38,​000 .​
This is​ the​ amount that you​ need to​ pay them .​
If the​ auto insurance company releases the​ $25,​000,​ where will you​ get the​ remaining $7,​000? Your car is​ already a​ wreck but you​ still owe the​ finance company .​
You need not face such a​ dilemma if​ you​ have a​ gap insurance .​
With the​ gap insurance,​ you​ can ignore the​ difference between the​ amount covered by the​ regular car insurance and the​ amount you​ owed the​ car loan company .​
This difference is​ called a​ gap and the​ gap insurance bridges it​ so that you​ need not rack your head for additional financial resources .​
A car lease contract must also have a​ gap insurance .​
It is​ a​ feature that prevents you​ from draining all your finances .​
Some dealers who lease cars don’t offer a​ gap insurance .​
This is​ okay as​ long as​ they include a​ gap waiver in​ their lease contract .​
This waiver declares that you​ are no longer responsible for gap charges that may occur when your leased car is​ wrecked .​
When you​ get a​ gap insurance,​ determine how much is​ offered in​ the​ gap policy .​
You should also know how much will be added to​ your monthly bill .​
a​ gap insurance,​ for it​ to​ be recognized,​ must be accompanied with comprehensive insurance policies that cover collision .​
Sometimes,​ a​ gap insurance may no longer be needed if​ the​ terms in​ your regular auto insurance policy indicated that the​ company will pay off the​ full amount you​ owed from the​ car loan lender.

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