Imagine you are out on the road with your new car and suddenly a rash driver smashes his car into yours. All what you are left behind would be a bare escaped survival for you if you are lucky enough but a fully damaged car of yours from everywhere. So it is quite evident that accidents on roads are not always due to our own mistakes but can be the mistakes of the other people that's why it is good in fact essential to get an Insurance coverage immediately after buying the car. Without an Insurance coverage, it will be up on you completely to bear all the costs in case of the occurrence of any accident. When you purchase a car, rightly after you drive that car of the lot, your car will lose its value and price significantly and value reduction is as much as 20% to 30%.
Sometimes, these accidents are of very cruel nature that they even damage the car beyond the level of repair. That's the point where this Insurance coverage becomes null as they can't protect the total expense of car in these severe cases which occurs once in a blue moon. In case you meet any accident, the total what you will get would be equal to the currently existing market price of the car which would definitely be 25 or 30% lesser than the cost price, incurred earlier.
Significance of GAP Insurance
Consider the example; Let us suppose that you have bought a car worth $31,000 and you have driven it of the lot. Now your actual lease payments are off course based on the cost you incurred while buying but the value of the car is nearly 30% less than the value it had when bought. When the Insurance company would pay you, they will definitely pay you $ 22000 (approximate figure showing 30% reduction) where as your lease payments would still be based over that initial $31000 plus interest.
GAP Insurance plays important role if this kind of situations arises as they would serve you at the time, when your car would be completely wrecked up by covering the whole money, you owe to the company who has provided you loan. This coverage of car Insurance is known as Guaranteed Auto Protection. This is actually the coverage between the cost you indebted on the car and the price of your car. With the help of this guaranteed auto protection, you would have a crystal clear record with your existing lender of the vehicle as this additional coverage will pay the outstanding balance for you.
GAP Insurance is a must for nearly all the cases and the rates of GAP should not be an issue for you as they are relatively lower in comparison to the other available options. Some people avoid this Insurance when they purchase or lease the new vehicle for them which in the long run imparts adverse effects as initial move of cost reduction proves hell expensive in future. So do refer your insurer to add up the coverage amount at policy purchasing time.
You can have guaranteed auto protection with you existing insurer who may be insured for the discrepancy between the real market price and the amount you lend for loan of the car. GAP is considered as the best Insurance coverage but still it is not been provided by many companies around due to various reasons. There are some ways through which you can find these GAP Insurances and the best method is to search for them online. Internet is a vastly grown up arena and you can find a lot of auto Insurance companies online offering you these GAP Insurances. You can also look for the local dealers in the towns but it requires extreme research and would cost a lot of your time. Often it is regarded that these GAP Insurances are authorized by the lease contracts but if it is included as the part of lease, you must check this before that how much of the portion, you would need to pay and how much is the obtainable portion. You must pay head towards this as many people make mistake at this point.
GAP is essential and considering it essential is a wise trait. So order your policy right now and enjoy your time.
Still wondering? Have a look on detailed features of gap insurance.
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Cullen Martini
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Martini, C. (2012, February 28). . Retrieved March 2, 2012, from http://ezinearticles.com/?When-Do-You-Need-GAP-Insurance?&id=6910639Chicago Style Citation:
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