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Can Gap Insurance Provides You Financial Protection

GAP insurance can provide financial protection in the first few years of vehicles life , especially if you have financed the purchase of a car with financing, such as the purchase or lease.If your car is written off because of damage to an accident or theft, gap insurance policy will pay the difference between the true value of your car and an outstanding figure in settlement funding to hire purchase or lease. Generally, the gap insurance policy will provide coverage in case of accident or theft where the vehicle was written off by the insurance company. You may be under the illusion that your motor insurance policy will cover you in case of a claim! In many cases, fully comprehensive insurance will provide coverage only to the actual market valuation of the vehicle. In many cases, it may leave a substantial gap between the original purchase price and valuation of the insurer!

In addition to accidental damage, your car can easily be written off as a result of theft. If you have a finance agreement for your vehicle, your insurance company will base its assessment on the current price of the car. Thus, the resulting claim reimbursement will be considerably less than the actual price paid at the time of purchase with an increase in the gap as the car gets older. To compound this further, the insurance company’s assessment¬† may be significantly lower than the outstanding balance on your finance agreement, leaving you to pay any shortfall once the claim was paid.

For example, let’s assume that you have purchased a new car for $15000, a rather modest price on the market today! Two years later, the car is written off due to theft. Your insurance company offers you a current market value, which was $ 7000. You have just lost $ 8000! Do you think that assessment is a little harsh, when in fact it represents an average depreciation over two years for many of the most popular cars on the road today.

Worse yet, if you took a loan to buy a car, you may find that the gap between settlement funding and evaluation of the insurer can be significant! Remember, once the insurance company has written off your car, you are responsible for significant funding and, therefore, solely dependent on the value of the machine-house finance amount, which in today’s market is unlikely to be true!

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