WHAT IS GAP INSURANCE?
The GAP insurance is a useful supplementary insurance for leasing vehicles. The GAP coverage also called differential comprehensive insurance, is an additional vehicle insurance for leased vehicles. GAP protection is taken out in conjunction with full or partial comprehensive insurance. The term insurance is Guaranteed Asset Protection.
Anyone who has ever had a leased vehicle has probably heard of it - but many do not know exactly what it actually is and what it is needed for. It is particularly recommended for vehicles from the upper middle class.
Difference coverage or GAP protection is important for anyone wanting to lease or finance a vehicle. Partial or fully comprehensive insurance generally covers the replacement value of leased or financed vehicles in the event of a total loss or theft. Often, however, this is lower than the outstanding leasing or credit installments. This difference must then be borne by the policyholder - unless he has GAP coverage. Because this secures exactly this “security gap” for the insured.
The replacement value is usually less than the remaining amount to be paid to the lessor. The GAP cover closes this financial gap and covers the difference between the replacement value and the remaining claim .
How much does GAP insurance cost?
If opted for GAP coverage when you took out your car insurance, GAP insurance is already included in your car insurance premium and does not have to be paid for separately.
When does the gap cover apply?
The GAP insurance comes into effect if you have a total loss with your leased vehicle or if it is stolen. All other damage is regulated by your comprehensive insurance.
What do I need GAP cover for?
Leasing contracts are regulated in such a way that the lessee must secure the leased car in an appropriate manner against damage and theft . In order for this to be the case, lessors usually require that at least one partial comprehensive insurance must be taken out. Some explicitly require GAP insurance to be taken out.
If the leasing vehicle is stolen or completely destroyed due to an accident , you will receive the replacement value without gap cover - but this is usually not sufficient to pay off the remaining leasing amount . This is where GAP insurance comes in.
When is GAP coverage worthwhile?
If you drive an upper mid-range car or luxury model , GAP coverage is highly recommended.
The reason: With new vehicles and especially with expensive vehicle models, the loss in value is particularly high in the first few months. If your car is then stolen or if you have a total loss, it can quickly become expensive.
But GAP coverage can also be worthwhile with a cheaper new car. Ultimately, it is a matter of arithmetic and the question of how well you want to protect yourself and how you assess the risk of a total write-off or car theft. Even if the additional protection has an impact on your insurance premium - if the worst comes to the worst, you don’t have to pay for the difference.
Sample calculation for GAP coverage
Imagine you have an accident with your fully insured leasing car. The result: economic total loss.
According to the report, the vehicle had a replacement value of $20,000 on the day of the damage. Your car insurance will reimburse you for this contribution. However, the remaining lease amount is $25,000
The difference of $5000 is covered by the gap insurance.
How long does GAP coverage make sense?
As a rule, leasing contracts have a duration of 36 months. GAP coverage is advisable for all lessees over the entire lease period. It is particularly useful if you do not have any new price compensation, because then you will only receive the amount for the replacement, not the new price of the car.
What does GAP insurance pay?
The GAP cover replaces the remaining leasing amount on the day of the claim minus the compensation from the comprehensive insurance, i.e. the replacement value as well as the remaining and old parts of your car and the deductible you have agreed. Lease payments that have already been paid are not included in the GAP cover .
How can I cancel GAP coverage?
Since GAP insurance is linked to leasing contracts, the protection automatically expires at the end of the leasing contract.
GAP coverage or new price compensation?
Gap coverage and compensation for new prices are not mutually exclusive, but can complement each other. This differs from case to case and has to be considered individually.
If you have agreed to compensation for the new price, the insurance will reimburse you for the entire purchase price within a period of up to 24 months . So you get more than just the replacement value ! Exception: Agreed deductibles and the residual value after a total loss are not reimbursed .
GAP coverage and reimbursement for new values are a safe combination
If you want to be absolutely sure, you should arrange the GAP insurance and new price compensation right at the start of the leasing . The GAP cover always applies when the reimbursement no longer applies, for example when the period has expired. However, it can also happen that the lease amount is higher than the acquisition value due to unstable automobile prices and that a financial gap remains if necessary. This is where GAP insurance comes in again. Some licensors therefore also require comprehensive insurance with GAP coverage.
Who is GAP coverage for?
GAP coverage is particularly worthwhile if you lease or finance a vehicle in the upper middle class or upper class - simply because the more expensive the vehicle, the greater the gap to be closed.
You can usually take out GAP cover directly with your comprehensive insurance. If you do not currently have GAP coverage in your policy, you can usually simply book it as well.
GAP protection - yes or no?
While it is obvious that GAP protection is worthwhile for very expensive vehicles, it is not always so easy to decide for vehicles in the lower middle class and also for small cars.
Of course, GAP coverage makes your insurance cover more expensive. Strictly speaking, you would have to calculate when the additional costs for GAP coverage would exceed the gap that actually arises and then weigh up accordingly. That is the purely economic approach.
However, there can be other good reasons for GAP protection. For many, for example, it is much easier to calculate a slightly higher insurance premium on a regular basis than to put $2,000, $3,000 or even more on the table all at once. GAP protection can help even with a tight budget.
Ultimately, however, it is always a question of individual security needs and personal financial planning.
Which types of insurance cannot be saved?
Auto insurance is divided into compulsory insurance and commercial insurance according to its nature, and commercial insurance is divided into basic insurance and additional insurance according to the scope of liability. Compulsory traffic insurance is a type of insurance that must be insured mandatory by the state. Basic commercial insurance can be insured by one or more, while additional commercial insurance cannot be insured independently.
With the increasing popularity of private cars, hidden traffic hazards have also increased. It is necessary to purchase necessary car insurance to protect your car and others. Below, is the data on which auto insurance cannot be saved:
1. " Car damage insurance " must be covered
Whether it is a new car or an old car that has been driven for two years, car damage insurance must be covered. Even if your driving skills are good, but the saying goes well, “Don’t be afraid of ten thousand, be afraid of accidents.” It may be touched or scratched one day. It will cost a lot of money to go to the repair shop for a little repair.
2. There are tips for car liability insurance.
If you often take family members in your car, and you and your family have already taken out accident insurance and accident medical insurance, then as a private car, there is no need to take out personal liability insurance on the car
. Because the coverage provided by accidental injury and accidental medical insurance basically covers the protection that can be provided by liability insurance for onboard personnel . However, if you often take different people in your car, it is best to insure the onboard personnel liability insurance.
3. Buy glass insurance , see the type of glass.
When buying glass insurance, you should pay attention to choosing imported glass insurance or domestic glass insurance. The difference in premiums between the two is large. Due to the high quality and low price of domestic automobile glass, it is completely comparable to foreign ones, so you can consider choosing domestic glass, which can save about half of the insurance premium .
Some car owners cherish their car very much, they just like the original one, so they should choose imported glass, but if they don’t pay attention to the type of glass insurance when insuring, and only knowing that the insurance is domestic glass insurance when you change the glass, it will give you a lot of trouble.
4. do not include deductible insurance to choose
It is recommended that you take out special insurance without deductible. According to statistics, car owners use car damage insurance and third party liability insurance when they are out of danger. By purchasing special insurance without deductible, you can get 100% compensation for the losses you should bear on these two types of insurance. Of course, for different insurance companies , not all of the additional insurance are not deductible, as well as to buy non-deductible insurance as well as the owners themselves also bear part of the cost of “absolute deductible” and therefore, insurance experts reminds owners in purchase to buy auto insurance.
Third-party liability insurance
What is third- party liability insurance? Third-party liability insurance means that in the event of an accident, the insurance company will compensate for the personal injury or death of other people, except the driver and passengers or direct damage to property. For example, if a car accidentally hits an electric car, the insurance company is responsible for the damage to the electric car and the compensation for the injury of the electric car driver.
What to pay attention to when buying auto insurance.
With the increase in the number of motor vehicles in the society, the insurance awareness of car owners has gradually increased. Many car owners have various problems in buying car insurance. Insurance experts remind that consumers should carefully read the auto insurance clauses and related regulations when purchasing auto insurance .
In order to save premiums , some car owners have insufficient insurance. In this way, policyholders can save a little premium, but if an accident causes vehicle damage, they will not be paid in full.
When buying auto insurance, compulsory traffic insurance must be bought. Experts suggest that in addition to compulsory traffic insurance, different car owners can increase insurance types according to their actual conditions.
If a veteran driver drives an old car, he needs the least car insurance. Generally, he only needs to buy three kinds of insurance, including car damage insurance, commercial third party liability insurance, and car personnel liability insurance.
Repair, so insuring car damage insurance is indispensable. Although a veteran driver has a wealth of driving experience, accidents may occur. In order to protect yourself, insuring car personnel liability insurance is also necessary.
When buying car insurance, these aspects needs to be honest.
Once a private car is insured, the effective insurance policy is a legally binding contract. As a party to the contract, the rights and obligations of the insurer and the insured are also equal. Therefore, consumers must fulfill the following truthful obligations after insuring and insuring:
1. Basic information about your car: license plate number, engine number, frame number, date of purchase, inspection status, etc.
2. Daily storage, maintenance and accident situations of your car.
3. About the driver of your car: whether it is fixed, gender, age and driving experience.
4. About your car’s past insurance status: insurance company, type of insurance , claim status, etc. Other things that insurance companies need to know.
You should answer the above according to the actual situation. If you deliberately conceal the above content, once an insurance accident occurs, you will not receive any insurance compensation, and it is impossible to withdraw the insurance such as insurance liability , exclusions, insurance amount, insurance period , claims handling, basic insurance and additional insurance in their respective areas as well as other matters.
Only by mastering the above content can we better protect our rights and obtain financial compensation.
Before you buy car insurance
First, read the car insurance clause carefully . Many car owners only know the names of auto insurance types and what they are insured. As everyone knows, each type of insurance is very knowledgeable. Only by reading the insurance clauses can the insured auto insurance play the best role.
Secondly, pay special attention to the exclusions of each insurance type. In many auto insurance cases, disputes are often caused by the car owners neglecting the exclusions when they apply for insurance .
When they are out of danger, they will buckle with the insurance company . If you understand the exclusions, you can know what to do and reduce the occurrence of disputes.
What must I buy for car insurance?
Compulsory traffic insurance mainly protects the risk of personal injury and property loss in the event of a traffic accident, while car damage insurance is responsible for compensation for damage to the vehicle due to an accident.
A new driver who has just bought a car will inevitably encounter some small scratches during the driving process, and every repair will waste a lot of money. If you purchase car damage insurance at this time, the insurance company can cover the cost.
In addition, third-party liability insurance is also a basic insurance type , suitable for novices who are just on the road. Third party liability insurance mainly covers the insured when there is an accident, which causes a third party’s personal injury or property damage. In the event of such an accident, the insurance company will be responsible for the payment.
Of course, the insurance amount also needs to be set according to the driving proficiency of the owner. Generally speaking, the insurance coverage for old drivers is generally lower than that for novices.
Car insurance is generally purchased once a year, but for car owners who buy a car with a loan, car damage insurance requires that it be purchased according to the length of the loan, and other insurances are still insured once a year.
Recommended types of auto insurance for new cars
Under the circumstances, commercial insurance , car damage insurance , theft and rescue insurance , glass insurance, etc. are recommended to the majority of car owners and consumers. If the quality of the new car is acceptable , spontaneous combustion insurance can be bought or not.
To purchase auto insurance for a new car , in addition to the major points described above, car owners and consumers must also make comprehensive judgments based on their actual driving environment and driving skills to construct a suitable insurance plan.