Entries Tagged 'Auto Insurance' ↓

Auto insurance and Gap protection, the insiders’ story.

It seems that nowadays there is an insurance for everything. When you ride a bus, a percentage of the ticket price is to fund your insurance. When you take a flight a large part of the cost of flying is spent on insurance. Going to school, buying at your local supermarket, riding a roller coaster, manufacturing and selling anything all require generous dosages of insurance.

Auto insurance is no exception, nearly every driving activity has its own special insurance. You need liability insurance to even own a car legally If you drive outside the country you are going to need extra insurance. If you own any accessories in the car or you can’t afford to buy another car if yours is stolen, you need insurance for theft.

There are so many kinds of insurance for so many eventualities that you might be surprised to find there is a gap protection insurance also. A gap between what? Can they fit any more insurances? The answer is yes. Although it is true that our “developed” world has no shortage of insurances it is also true that it has no shortage of caveats, clauses and lawyers. Auto insurances provide a service, a very useful service, nevertheless they are out there to make a profit. Profits aren’t made by paying for every claim that is made.

There are also ocassions when insurance although claimed and approved does not supply the funds necessary to cover the loss. This is the raison d’etre of Gap protections. This is better explained with an example. Imagine you have  adequate insurance, you are a planner and you always plan for every eventuality. This is why you have a fully comprehensive insurance. Unfortunately you crash straight into a brick wall totaling your three year old car. The ice on the road was not your fault but you can’t blame anybody else either. Your insurance will pay for your damage but only up to a percentage (this varies between policies, typically around 80%). That is great. You paid 14,000 dollars for your car 3 years ago, you still half to pay for 8,000 dollars and the market value of the car is 6,000 dollars. The insurance company might pay 80% of the market value, 4,800 dollars. That leaves you with 8,000 dollars minus your super settlement of 4,800 dollars. In other words you are out of pocket by 3,200 dollars. That is assuming you don’t have a deductible on your damages insurance. If you do, add that to your out of pocket figure.

Gap protection would have avoided that. Gap protection will cover the gap between the amount you receive in settlement for your claim, the deficiency balance with a total loss, and will pay for the deductible on your insurance. Add to this any delinquent payments like taxes and past due charges which are also settled by the Gap insurance. Most Gap insurances also include theft insurance, making it a nice piece of insurance if you haven’t spent all your income on the other 20 insurances you have.

How to make a claim on your auto insurance?

When should you claim on your auto insurance? How should you go about applying for cover from your auto insurance? These questions are vital if you want to use your car insurance which is after all why you bought it. Many people view auto insurance as a necessary evil in order to be able to drive. It is much more than that, it can save your bacon when you have suffered an accident and you are under fire from those involved in the accident. This is especially the case if you were at fault in the accident.

When should you claim on your auto insurance?

1) You should claim when your auto insurance covers the claim you are making. As you know car insurance as all kinds of insurance have clauses and fine print which often qualify the coverage the insurance company provides. Before you make your claim re-read the insurance policy and make sure your insurance covers the damages you caused or received. For instance, heaven forbid it, but if you were driving under the influence of alcohol when an accident occurred you auto insurance might very well not cover your claim. You might be without cover if you were driving outside your country without contracting extra auto insurance. As you can see it is very important to understand what you are covered for and what you aren’t insured for as it could mean the difference from having to undergo some paperwork and mild discomfort and economic disaster and even bankruptcy.

2) You cannot claim from your insurance if the cost of the claim is lower or equal to your deductible. A deductible is a cap you place on your auto insurance coverage to reduce the cost of the premiums. What deductibles do is share the risk of insurance between you and the auto insurance company. The deductible can be set at any level, 100 dollars, 1,000 dollars or higher. This will mean that the first 100, 1,000 dollars or whatever amount you decided as your deductible will be paid by you, anything over and above might be covered by the auto insurance company.

3) Even if you are covered by your auto insurance and the cost is above your deductible it still might not be worth your time or money to claim. This is so when the cost of the claim is only marginally larger than the deductible but will affect your no claim bonus, increasing your next year’s auto insurance premium.

In every case it is a good idea to contact your broker. He is your friend in these matters because he / she is highly motivated to keep you as a happy customer. Auto insurance brokers like all insurance brokers receive residual commission every time you renew your auto insurance. If you are unhappy with your auto insurance company and cancel your coverage y0ur broker loses his commission. He / she cannot authorise your claim approval but he can help you make the right moves to increase your chances of getting your claim approved.