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| English: Allied Insurance Company of the Maldives - Front Office (Photo credit: Wikipedia) |
No matter how methodical you are about doing research before buying car insurance, you may still overlook some important issues. As you never know when your car may meet with an accident, it pays to know more about situations that may get you into trouble in future. Read this article to know about 3 important car insurance related issues and how to deal with those.
1. GAP insurance
GAP stands for Guaranteed Asset Protection. As the term implies, GAP auto insurance closes the gap between what your insurance company pays you when your car gets totaled and what you owe to the finance company. Having a GAP policy is imperative, especially when you decide to buy a car with small down payment. Let’s take a look at the following example to better understand the importance of buying a GAP policy.
Let’s say that you purchased a car for $ 30,000 with a small down payment. After paying installments for three months, your car met with an accident and was declared a total loss. After you informed your insurance company, they decided to pay you only $24,000. According the insurance company, the car lost $6,000 from its original value within these 3 months. However, you owe the full $ 30,000, plus the cost of tax to the finance company. Ultimately, you are in situation where you have to pay more than $ 6000 from your pocket.
Being under the cover of GAP insurance can save you in such a situation. GAP insurance helps you to get total coverage in situations like this.
2. Terminating auto insurance policy
There may be different reasons why you want to terminate your current car insurance policy. May be you found a more affordable auto insurance quote, or planning to relocate to another state. In any case, it is important that you inform your current insurance company about your decision well in advance through a formal notice. Not doing so may cause you to pay more than what you owe, and/or affect your credit rating in the long run.
Many policyholders have a misconception that a car insurance policy automatically terminates at the end of each policy term. However, that’s not always a case. If you don’t send a cancellation notice to your insurance company, your bill for the next month will come as usual. And when you don’t pay it, you policy will be cancelled. Eventually, this affects your credit rating.
3.Repair parts
Another issue may be regarding the quality of replacement parts used for repairing your car. Some auto insurance companies dictate a repair shop about what kind of parts they should use. Basically, there can be two kinds of replacement parts – OEM parts and aftermarket parts. While OEM parts come directly from the manufacturer, aftermarket parts are basically used parts bought from third parties. Not to mention, OEM parts are good in quality and more expensive. Many insurance companies dictate repair shops to use aftermarket replacement parts. As a policyholder, you have to be more cautious about these things.
To be able to deal with these issues more effectively, you should keep yourself more informed with latest insurance related news and reports.
Insurance: A Guide
"Remember kids, I have life insurance" - Adam Savage
This is a guest article from Tatyana Levin
These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).
The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.
A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed. But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.
Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.
These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason. The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.
The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.
About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com
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