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    How does Gap Insurance, add-on car collision coverage work?


    Gap insurance
    Gap insurance is an add-on automobile insurance coverage. It is to cover the gap between the amounts of the vehicle actually owes and the actual car value, in the event of occurrence any unpleasant event, such as an accident.
    For example on the happening of a car accident, your car damages are irrecoverable. The ultimate solution is, either to sellout your car or replaces it.  The cost of loans you be obliged is $20,000 but the ACV- actual cash value is $17,000. In the event you have undertaken gap insurance coverage, it will help you out to recover the remaining amount of $3,000.

    What does Gap Insurance Cover?

    Gap insurance coverage is quite adaptable and flexible in nature, but mindful that gap insurance only covers damage to your vehicle, no other property or physical injuries resulting from an accident. Here are a few common considerations with respect to gap insurance coverage.

    •          Covers car theft


    If your car is stolen, gap insurance can help you pay off the balance of the loan. If you moved a loan balance from another car into the loan, gap insurance can prove beneficial in the event of an overall loss.

    •          Covers Negative Equity


    Negative equity is another stretch for the gap between what you are indebted on your vehicle loan and the actual value of the car.

    •          Do not cover the deductible cost


    Even in the event of an accident covered under your gap insurance policy, you would still have to pay your deductible. In other words, if the "gap" settlement amount is $3,000 and your deductible is $500, your total recompense amount would be $2,500.

    •          Do not cover engine failures


    Gap insurance is only used in the event of a total loss from an auto accident, not for maintenance costs and mechanical repairs.

    •          Do not cover fetal crashes


    Gap insurance is only valid to vehicle losses and does not cover bodily injuries, lost wages medical expenses, or funeral costs.

    Where to find Gap Insurance?

    Most probably your car dealers offer you gap insurance coverage but it is preferable to undertake gap insurance from the vehicle insurers. The reason behind this is the auto insurance companies serve their insurance policy at cheaper rates rather the car dealers.

    Gap Insurance, add-on car collision coverage is worth considering if you get it on the basis of following conditions;

    ·         You are buying a car either on lease or go for a second-hand automobile
    ·         You are funding a car without making large payments, creating a gap between the amount you owe and the actual car value.

    Statistics on automobiles and vehicle insurances concluded that I the very first year the vehicle depreciate about 30 percent, in the next year it downfalls nearly 20 percent. As a result car owners end up their loan payments by upside down. In such a way gap insurance is a wise investment to cover up the gap between car's actual value and the amount an individual owes.

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