GAP INSURANCE
What Is GAP Insurance?
To study more about gap insurance we need to know what gap insurance is. GAP is basically an abbreviation for Guaranteed Asset Protection and it was established in the North American financial industry. Gap insurance is basically used on new and used vehicles like cars and heavy trucks, also it is required by companies and financing companies.
WAYS TO GET GAP COVERAGE:
There are precisely two types of ways of getting gap coverage.
-The first type is way easier as an insurance policy sold by a broker. It is regulated by the insurance industry, the coverage here as well as in the second type is the same and sold as a soft product through car dealership.
- The second type is a waiver agreement sold by a Finance & Insurance Manager. This type is unregulated. Coverage is usually financed along with the lease/loan. Claims are subject to a total loss. The total loss is usually determined by the primary insurance company’s third-party.
COST OF GAP INSURANCE:
Just like normal insurance varies with states and different areas the same way gap insurance also varies with states. Some exclusions include a maximum loss limit of $50,000 while others require a loan term of less than eighty four months. GAP is an optional purchase, however, many states in the US require that a car dealership offer GAP at the point of purchase. Although GAP is optional, some finance companies require GAP as a condition to obtaining a loan.
UK GAP INSURANCE:
Walking to the past, In September 2015, the FCA changed the way that Gap Insurance are sold by car dealers in the UK.
Claims ratios for GAP insurance were just 10% between 2008 and 2012, meaning that just £10.00 was paid out for every £100.00 paid in premiums. The poor value for money being given to consumers prompted the FCA to require the following rules:
They have to ensure dealers make consumers aware of the fact that other suppliers exist.
the transaction may delay by 4 business days only.