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Put on Your Thinking GAP: A Guide to GAP Insurance

gap-insuranceThat said, GAP insurance is incredibly useful, regardless of whether or not you find it interesting. In fact, the decision to purchase GAP insurance might be one of the smartest decisions to make when purchasing a new car.

After all, accidents are somewhat inevitable—especially if you’re raising teenagers. Experience has taught me that it’s better to be prepared than it is to trust your luck (or the dealer from whom you’re purchasing your vehicle) and hope everything works out.

Now, for those of you who have been operating under the assumption that GAP insurance is part of your dental payment plan, allow me to explain: GAP insurance (also known as Guaranteed Auto Protection or Guaranteed Asset Protection) is a policy that covers the difference between the actual cash value of the vehicle and the balance you still owe. This comes in handy if you (or those rambunctious teenagers you’re trying to raise) happen to crash that brand new car you just bought.

Here’s an example—say you purchase a car for $15,000 (with a down-payment of $2,000). You’re leaving the dealer’s lot when you’re gripped by a sudden and ferocious fit of sneezing that causes you to lose control of your car and crash headfirst into a minivan packed with teenagers.

Now, normally, you’d be in pretty hot water. After all, the value of a vehicle depreciates the minute you drive it off the lot—sometimes by as much as 25-30%. This means that, even in a world where your new car isn’t a mangled piece of garbage, you still wouldn’t be able to sell it for much more than $12,000.

Let’s say, for the purposes of this example, that the minivan does $5,000 worth of damage to your new car. Your “brand-new vehicle” is now worth $7,000. This is a huge problem, since you still owe the dealer $13,000. Where are you supposed to get that extra $6,000?

Luckily, you’re an intelligent, forward-thinking individual who researches automobile insurance so, naturally, you chose to pay a little bit extra to purchase GAP insurance. While it’s pretty unfortunate that you functionally paid someone $2,000 to crash a car, the situation could have been worse. If you hadn’t purchased GAP insurance, you’d be out $8,000 (as opposed to $2,000).

As you’ve probably already realized, GAP insurance is more of a debt cancellation agreement than an actual insurance policy. That said, it’s worth investing in—especially if you just bought a new car. It’s easy to find, relatively cheap and it can save you major headaches in the long run.

So prove you don’t have a gap where your brain should be! Purchase GAP insurance!

Erin Patrick is a car enthusiast and has been associated with the automobile finance industry for nearly 10 years. She enjoys writing on the subject and helping consumers and businesses alike find the best car financing available.

How to Smoothly Switch Car Insurers

Switching to a new car insurer is not as grueling a task as it is generally perceived to be. Handling the whole process of changeover in a proper way would save you from any unpleasant surprises and undue troubles.

6 simple steps for a smooth transition

Go by the following sequence of 6 simple steps to ensure a transition with minimum hassles-

  1. Shop around and get a new insurance policy from a new insurance provider.
  2. Ensure that the in-force date of your new policy coincides with the cancellation date of your existing policy so that there are no lapses.
  3. Notify your existing company in writing for the cancellation of the running policy with them providing the complete details regarding the intended cancellation date and the reason for cancellation.
  4. Complete the all the cancellation procedures of your existing company such as payment of the cancellation fees.
  5. Ask for the due refund of your unused premiums, if any.
  6. Confirm the cancellation of your old policy by receiving the official policy cancellation notice from the insurance provider.

Best time to switch insurers

The most appropriate time to make a switch of the insurance company is around a month prior to your policy renewal. The renewal period of car insurance policies generally varies from 6 months to a year. Usually, the insurance companies are required to send a renewal notice to the policy holders about a month before the renewal date.

Cancellation in the middle of a cycle

The good news is that you are not bound to wait for the renewal of your existing policy to make a call for cancellation. However, annulling your policy in the middle of a cycle bears certain drawbacks:

  1. You might have to face certain problems with recovery of the unused premium amount as the refunds could be made subject to heavy deductions.
  2. You could be imposed with cancellation fees as penalty.

Hence, you should prefer to wait for the renewal time to withdraw your car insurance policy.

Consider policy switch with the existing company

Buying a new insurance policy with a new insurance provider might not be the best idea. Your current company might be able to make amendments in the existing policy or you can switch for a better policy.

If you choose to withdraw the policy then you might have to give up on the longevity or multi policy discounts and the enhanced services being offered to you under your current company’s customer loyalty and retention programs. Give a chance to your company to offer you better deals.

Quick tips

  1. Select a new company after a comparative study of the rates and services being offered by the prospective insurers in the market.
  2. Adhere promptly to the cancellation formalities of your existing insurer.
  3. Do not forget to get your new policy effective before cancellation of the old one. Enforcement of new policy can take some time so you need to plan accordingly.
  4. Ensure that the new policy comes at better discounts and savings than the previous one.
  5. Attract better deals from the prospective providers by keeping your car in a good condition by going for regular brake services and overhauling of the engine.

Author Bio: Ella Rich is a professional writer. She covers various topics. She spends her time by researching best things about technology like car repairing and servicing with her followers. She loves travelling to new places and discovering exotic cultures and cuisines.

Comprehensive Car Insurance Cheaper Than Third Party Cover?

If you’re planning on driving a new car using cheap car leasing or personal contract hire, it may be a condition of your deal that you take out comprehensive insurance. If there car doesn’t belong to you then your car lease company will want to know that the vehicle is adequately protected in the event of theft or an accident.

For years, many customers have seen this as a disadvantage of leasing a car. That’s because drivers generally assume that comprehensive insurance is more expensive than third party cover, and so pushes up the total monthly cost of a car lease. However, new research has found that, for many people, comprehensive cover is actually cheaper than third party and can save you money. Keep reading to find out more.

Young people pay less for fully comprehensive insurance than for third party cover

Fully comprehensive insurance covers damage to other cars as well as your own. Third party only covers other drivers if you are to blame in an accident and your policy will only pay out to cover the third party.

It follows, therefore, that comprehensive car insurance – often a condition of car leasing or contract hire – would be more expensive than third party cover. However, research from a leading financial website published in the Daily Telegraph has found that most people under the age of 40 will find it cheaper to take fully comprehensive insurance rather than third party cover.

The analysis shows that an 18 year old driving a Ford Fiesta choosing third party only cover was quoted 146 per cent – or about $2,000 a year – more for their insurance than if they had opted for a fully comprehensive policy.

The Telegraph reports that this trend continues until age 40; on average a 20 year old could save about $500 a year opting for fully comp and a 25 year old will find it about $75 cheaper on average.

Peter Harrison, car insurance expert at the website who commissioned the research, said: “Comprehensive cover is often the cheapest for most age groups, as well as offering the highest level of protection. Young drivers should pay particular attention to the policy terms and conditions and take into consideration how they would fund the cost of repairs should they be involved in an incident their policy doesn’t cover.

“You should also check the excess levels on your policy as some insurers may uplift this amount based on the age of the driver – a high excess could add hundreds to the cost of a claim.”

Comprehensive cover can be cheaper as it suggests that you are a more responsible driver. Because young drivers in particular ask for third party cover to cut their costs it makes insurers suspicious of the type of drivers asking for this cover and they raise their premiums accordingly.

A spokeswoman said: “Typically younger drivers will purchase a lower value car and in the past would have insured this under a third party policy as this used to be the cheapest option. Since insurers have become aware of this practice, they have made it so a fully comp policy is cheaper for a young driver as this not only protects the driver in the event of a claim, but also the insurer.”

Many car leases and contract hire plans will insist that you take out comprehensive insurance. As well as offering low cost finance for your car this condition could also now be saving you money on your insurance.

Author Bio: Vincent Hill is Marketing Executive at First Vehicle Leasing. First Vehicle Leasing provides
best chevrolet car leasing solutions to all over United Kingdom.