Car Insurance and Write-Offs - A
Nasty Surprise
Many motorists are unaware of it, but in the UK an
insurer will only pay out the current value of an automobile if the car is
written-off. This is a nasty surprise for many and particularly for those who bought
their car new, as depreciation can be as high as 70% after three years of
ownership. This can leave the owner seriously out of pocket and owing large
sums if the car is financed.
How to Protect Your Investment
The reason that they pay the current market value is
because of depreciation, but the current value will be nowhere near enough to
buy an equivalent or repay what you owe on a deal. This is the reason that
Guaranteed Asset Protection (GAP) insurance is so important and especially for
those buying new or on finance. GAP insurance will pay out the difference
between the original price of the vehicle or outstanding balance and the
insurer’s settlement. If it is financed, this will be cleared and anything
leftover can be used however the motorist wishes. This ensures that your
investment is protected and that you avoid any shortfall.
Write-Offs
No motorist believes that they will write-off their car,
but the roads can be very dangerous places and accidents occur on a regular
basis which leads to write-offs. In many cases, this is in no way the fault of
the motorist. Experiencing this can be traumatic enough, so it is important
that there is no nasty surprise when it comes to the insurance payout.
Unfortunately, many accidents are what show motorists that they did not buy the
correct insurance policy.
In addition to this, automobiles that are stolen and
never recovered are classified as total losses, so this is another threat that
every motorist faces and a reason why GAP insurance, available from specialists
like ALA,
must be considered by everyone.
America
In America, the value is determined by a third-party who will look
at sales transactions of a vehicle that is a match to yours and not prices
advertised. They will also factor in any substantial previous repair work and
accessories or equipment that was added to your automobile.
Overall, all motorists need to be aware of the fact that
there may be a significant shortfall between what they paid and what they receive
when their automobile is written off. This can be a very stressful time, so you
do not want to be seriously out of pocket at the same time and this is why GAP
insurance is so important.