What is GAP INSURANCE?
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Guaranteed Asset Protection Insurance(also called GAPS).It was established in the financial industry in North America.It covers the amount on loan that’s the difference between the owed amount and the covered amount by other insurance policy.
A finance company offers gap insurance at the time of purchase.
What are the ways of getting gap insurance?
there are two ways.
1: Insurance sold by broker
2:any finance/Insurance manager solds waiver agreement
Insurance industry regulates the first one while the second one is unregulated.
Coverage is sold as a soft product and usually the same in either case.
What’s the Gap insurance update in the UK?
Claimed ratio sure was just 10% between 2008 and 2012.meaning out of every £100.00 just £10.00 were paid in premium.
What are the basic risks?
Hazards and risks are,as the primary insurer,who is considered as a purchaser of an index hedge and an insurance contract that covers the difference between actual loss and index hedge.
Results of risk:
Results suggest that combining insurance with that of index hegde may increase the possibility of selling and extend the efficiency gains.
Basically the results depend mainly on transaction costs linked with both instruments.
Do we need GAP Insurance?
Anyone who has bought an expensive new car,should definitely consider this type of insurance.and someone who’s leasing the car,should also have gap insurance.
Where is it available?
It’s available in most states but in big cities, e.g; NY,LA,VA,CT,VT and NH they don’t allow this insurance.
Most companies have this insurance as an option,but not all,so confirm before if you want such type of insured product.
How expensive gap insurance is?
It’s expensive but It’s worth it all in the end.
Purchasing a new car,then adding a car sticker price of about 5% for gap insurance, seems little too expensive.
You have a margin of 1 year, to buy insurance,after purchasing the new car.
Be aware of:
Be aware of the dealers who say you can only buy insurance on the day of the purchase of your vehicle,and only from them.
How does it work?
It’s basically in easy words is; the difference between the booked value of a car and what you owe on lease.
The minute you drive the car off the dealer’s lot,its value decreases in thousands.
So if you have an accident,it covers the difference between what the book value is and what you owe on the leased car.
What are the benefits?
It’s an optional insurance coverage that helps you to pay off the loans if your car is stolen and if it’s more than the car’s value.
How long is it valid?
It’s valid for almost 3 years (36 months).Although it’s value varies on the providers.
Do you get money back after cancelling the insurance?
Often you get the full refund, when cancelling within 30 to 90 days. But it also varies on individual providers.
If you cancel it after the time you were allowed to get a full refund, then you have to pay for the rest of payment because you haven’t paid for the portion you’re cancelling.