Here is the answer to this question: What is gap insurance?
GAP Insurance for Contract Hire
GAP insurance, as all seasoned drivers will know, may have many different faces depending on what is going to be insured; the type of vehicle and subtype of insurance policy. Contract Hire or simply Lease, gap insurance can be obtained for a vehicle on arrangement only, but at the same time it is available to both companies and private individuals. If you have your car on lease or hire, it seems to be a good protection should anything bad and unexpected happen to the car, which is not owned by you. Companies dealing with Contract Hire GAP insurance are usually able to cover cars which are up to three or five years old and for a maximum period of around five years. In most cases Contract Hire GAP insurance is available for the period of time you require. So, if you have already leased the car for up to circa 6 months into a four or five year lease - you are supposed to pay only for the remaining cover. If, for any reason, the vehicle is written off during the contract hire or lease agreement, the driver will be personally liable for any financial shortfall remaining unless the car is protected by the Lease GAP Insurance. The amount of Contract Hire GAP insurance shall simply fit the difference between what you owe to the contract hire company and the settlement provided by the motor insurance company.
Critical Illness Insurance
As life insurance is a pretty complex financial product with many variations at sublevel, one can also find some sort of life insurance the aim of which is to protect an individual against all possible consequences of critical illness. Critical illness can have the same devastating effects upon someone’s life as that of an accident. Life insurance usually offers two sorts of critical illness cover. The first is fixed time, which is a protection policy that is going to pay out a cash lump sum if an individual dies or is diagnosed with a critical illness (that meets a policy definition within a set period of time known as the policy term). Here, the amount of cover remains fixed throughout the period of policy. The latter is mortgage life insurance, which is a decreasing protection policy where the cover level reduces each year during the term of the policy approximately in line with the outstanding balance on a standard repayment mortgage – hence the name of “mortgage protection”. While taking out critical illness life insurance it is good to remember that the range of diseases covered has increased to more than 30 and, as a result, contracts and their form can vary from one insurance company to another. Therefore comparing a few different offers may be quite useful.
What is Gap Insurance?
Gap Insurance or GAP (Guaranteed Asset Protection) offers an automotive owner extra protection in the event of their vehicle being written off or stolen. Basically it is a type of insurance that pays the difference between what you own and what the vehicle is worth.
For example, with a gap insurance policy, if a person were to purchase a vehicle that costs £20,000, each subsequent day, its value would decrease. This is normal practice and is commonly the case with most, if not all vehicles. So, let’s say the driver of this vehicle was then involved in an unfortunate collision with another driver, which results in the vehicle being a total write off. At that time, the car insurance provider will pay out an insurance premium to driver (depending upon the type of car insurance cover), which is based upon the current value of the car. It may be then that at the time of the crash, the car was worth £15,000, which is £5,000 less than what it was bought for (due to depreciation).Therefore, the car insurance provider will pay out £15,000.
However, with a gap insurance policy in place, the depreciated £5,000 would also be paid out to the vehicle owner meaning that they would get paid a total premium equal to the original value of the purchase. The same applies if the car is stolen.
Car Insurance
There is a famous proverb in the UK- that you only get what you pay for. It seems to be certainly true in case of buying gap insurance. An insurance policy is usually a highly complex document full of terms and conditions. It is generally supposed that the vast majority of people have never read a car insurance policy from start to finish, and it is little wonder, looking at the technical language that most of them are written in. For drivers, still, it is essential to check thoroughly details of insurance policy – what events are covered and the so-called price-to-value ratio. Taking the cheapest option is not usually the best way. The responsibility of insurance company may be so limited in most cases that nothing apart from the basic roadside assistance can be expected. So when buying one it is good to consider the following features: area coverage, breakdown cover, fast roadside assistance, replacement car in case of serious breakdown or simply an accident. It would also be wise to make use of word-to-mouth advertising. Some drivers have already used some insurers and they may be able to give an account of the level of service they met. And after such piece of advice- you may be more confident about the document you sign.