Guaranteed asset protection, or gap insurance, as it is most commonly referred to be something that’s most commonly sold when you purchase your new vehicle. It’s going to be relevant if your car is stolen or totaled, and the insurance is what’s going to cover the difference between the amount that you had to pay for the car in the first place and the actual value of your car. So, there are essentially a few things that you might want to consider when it comes to a gap cover and whether or not it’s worth it in general. Let’s take a look.
Do You Really Need Gap Insurance?
Let’s assume that we are going to go further on with the hypothesis about the car, as this is without a doubt the most relevant niche that this sort of insurance could be unraveled in. The truth is that this is an optional insurance coverage, and no one could force you to go for it unless you want to. However, you might think about paying for an insurance of the kind if you don’t want to risk being in negative equity. This might happen in some situations such as when you are paying a large amount of interest or when you bought a car which loses a lot of its initial value quickly. In these cases, having Gap insurance might really be a great deal.
Circumstances under Which Gap Insurance Might Not be Wise
However, as you can probably imagine, there are quite a few instances in which this might not be the brightest ideas. For instance, if your car is less than 12 months old and if you are its first registered owner the majority of the comprehensive insurances that are going to be offered are going to provide you the so-called new car replacement feature which is rather beneficial and renders your guaranteed asset protection plan absolutely void and unnecessary. You would literally be flushing money down the drain. In any case, you have to be incredibly careful when you read the terms and the conditions of your policy because auto dealers might include certain limitations and further exclusions. Some policies, for instance, are going to exempt the rule and render it mute in the event of a stolen vehicle or if the vehicle was involved in an accident and the owner, which is simultaneously the insured, was found at fault.
These are situations in which, even though your car is under 12 months of age and it’s covered by its regular car insurance policy, you might consider getting gap cover. However, you should also consider negotiating with the dealer in order to get rid of those limitations as you would otherwise have to purchase a new insurance plan and pay for it in addition.
Of course, there are other appropriate situations which could be mentioned, but the truth is that these are the most common and therefore the most relevant ones. You should keep into consideration that the Gap insurance could truly be a great asset if used properly.
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