Car Insurance and Write Offs - A Nasty Surprise
Many motorists are unaware of it, but in the UK an insurer will only payout 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 payout 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.
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 lead 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, must be considered by everyone.
In America, the value iswho 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 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.