When you are travelling by public bus, you may peep from the bus and see some people travelling by private car with relaxation and comfort. So everyone wants to own a personal car to get rid of daily traffic or overcrowded bus to enjoy an easy and comforting travel. Those who can own a car surely have a life of comfort, safety and wish to travel anywhere at any time. It makes the journey so amazing, safe and comfortable and also saves time and avoids the hustle of life. So they try heart and soul to buy a car with money earned with hard work. But if the fact is when you buy a brand new car and after some days, the car faces an accident, it may be one of the biggest tragedy in your life as you lose the car which is the great one in your life. GAP insurance meaning (Guaranteed Auto Protection) or GAP insurance has brought about an incredible assurance to safeguard your losing car and keep your tragedy far away from your life.
Why Need To Know GAP Insurance
GAP Insurance: GAP Insurance is to cover the amount of gap which is payable during the loss, stolen, damage, or car related property and this payable amount may be lease or loan owned from any bank or financial institute. Even in the case of vandalism, flood, tornados or hurricanes, if your car is damaged fully, you will be covered by GAP insurance.
Which Amount: GAP Insurance provides coverage for the gap amount. It is called the difference between the actual cash value during the loss and the amount of owing to the lease or loan at that very time.
Who May Offer: According to the rules and regulation of GAP insurance policy in New York, any person, firm, association and corporation are not authorized to offer GAP Insurance coverage. Only a licensed insurance or broker may offer GAP Insurance on behalf of an insurer. Insurance Law strictly prohibits those agents without an appropriate license.
Benefits Of Gap Insurance: When your car faces an accident, you may not be able to pay the loan owed by the third party like a bank and financial institute. The benefit is you don’t have to pay the amount owed to the bank. Your insurance coverage for your car from the insurance company will pay the amount. So you don’t have to pay from your pocket. So it is useful and safe for you to have GAP insurance coverage.
The Requirement Of GAP Insurance Coverage
- GAP purchase is an optional way to own a car. But you may not pay the full amount and take a loan from the bank.
- You can purchase gap insurance at the dealer or your insurance company by endorsement.
- You need to verify the rate when you are going to take it under insurance coverage.
- You may visit a different website that offers GAP insurance.
- After verifying the premium rate, you may opt any good one.
- Premium is normally paid in advance.
Here Are Three Ways To Cover GAP Insurance According To New York State Law.
1. If the retail instalment contract provides that the buyer shall be responsible upon a total loss of the vehicle occasioned by its theft, confiscation or physical damage for the gap amount as defined in paragraph fifty-two of subsection (a) of section one hundred seven of the insurance law, the holder, prior to the execution of the contract, shall by a notice on a separate document conspicuously disclose that fact and the obligations for which the buyer would remain liable in the event of a theft, confiscation or total loss of the vehicle. If the holder is required under subdivision two of this section to offer to waive its contractual right to hold the buyer liable for the gap amount in the event of a total loss of the vehicle occasioned by its theft or physical damage, the notice shall also: (a) state that for a separate charge disclosed in the notice the holder will waive its contractual right to hold the buyer liable for the gap amount in the event of a total loss of the vehicle occasioned by its theft or physical damage; (b) contain a provision informing the buyer that he or she may, as an alternative to purchasing a waiver, be able to purchase insurance covering the gap amount from an insurance company which has been licensed by the superintendent of insurance to write motor vehicle debtor gap insurance in this state; and (c) contain a provision permitting the buyer to indicate whether he or she wants the holder to waive its contractual right to hold the buyer liable for the gap amount in the event of a total loss of the vehicle occasioned by its theft or physical damage. The notice shall be signed by the buyer.
2. If the retail instalment contract provides that the buyer shall be responsible for a total loss of the vehicle occasioned by its theft or physical damage for the gap amount, the holder, prior to the execution of the agreement, shall offer to waive its contractual right to hold the buyer liable for the gap amount in the event of a total loss of the vehicle occasioned by its theft or physical damage, only if motor vehicle creditor gap insurance coverage is available to the holder and such coverage is obtained from a property/casualty insurance company.
3. A holder shall not be obligated under subdivision two of this section to offer to waive its contractual right to hold the buyer liable for the gap amount if, during the current calendar year or during the odd-numbered calendar year immediately preceding the calendar year in which the agreement is entered into, the holder has received motor vehicle creditor gap insurance declination notices or other evidence of unavailability from every insurance company whose name appears on the insurance department compilation of insurance companies which during that calendar year were authorized to write motor vehicle.
Cost Of GAP Insurance
All people don’t buy gap insurance if they are solvent and have enough cash for the purchase. But if you don’t have the amount, then you may opt it. According to Insurance Information Institute, you may pay about 20 USD per year to buy gap insurance. Most insurers will cover your car for collision so you may buy this insurance.
Some Things That GAP Does Not Cover
When there are financial hardships like job loss or death, there will be no coverage. You may seek maintenance or repair of the cars so here gap coverage is impossible. Rental car and new vehicles down payment will never be covered by GAP Insurance.
Calculation Of GAP Insurance: The main calculation here is GAP which is the difference between the car price at the time of loss and you owe to car dealership according to down payment. For example, you bought a car at 20,000 USD and you paid 1,000 USD at the time of purchase. After one year, if the car faces an accident and totalled out, the insurance company will measure the price of your car excluding depreciable cost during the loss. So the car may be worth at 17,000 USD which will be covered by the general insurance company and the Gap amount is 2,000 USD which will be paid by the GAP insurance company.
The fact is someone can’t pay the amount of the car as full and may owe to the car company with an amount of loan from any bank. GAP Insurance was founded in North America and it is one of the financial organization. This insurance covers the amount due to the car company which means the difference between the actual cash amount at the time of purchase and the amount due to the car company.
The most important thing to note is that all of us don’t have the capability to buy a car or on a cash purchase. A little amount gets that problem. The risk is always here and there. Understanding this risk factor, you should buy gap insurance to make sure you are not going to pay the amount due after payment of general insurance company during the accidental loss. If you don’t have gap insurance, you are going to pay the amount due paid by the insurance company.