Cheap Car Insurance – Do You Need Gap Insurance?

By | November 23, 2017

When deciding what type of car insurance cover to take out there are a number of considerations that most people should think about. Often the choice will be decided for them simply by the cost of the insurance policy, a fact well known to so-called younger drivers.

This is a group of people who the insurance companies tend to consider a high risk classification of potential policyholders, and load the cost of their premiums by a highly significant amount.

For this category of driver, it is quite likely that a fully comprehensive policy would simply be unaffordable, and that the most they would be able to afford would be a policy that complied with the minimum legal requirement for some type of third-party insurance.

If the financial options available allow you a greater choice of deciding which type of car insurance policy to have, then there are a number of options available to you. There will be a legal requirement to have some type of third-party liability insurance, which will either be a general catchall liability insurance, or may be split into a liability indemnity in respect of so-called property damage and so-called people damage.

In any event make sure that the insurance policy you have meets the legal minimum requirement for where you live, and if you do not consider this a sufficient indemnity to potentially meet your needs, it should be possible to acquire or buy additional insurance.

The other type of policy widely available is what is known as a fully comprehensive insurance policy which basically includes the replacement cost of your own motor vehicle or car in the event of a partial or total loss.

There’s also what is known as a gap insurance policy that is often available. This relates to the difference in price between the value of the car when there is a claim and the value of the car when the person bought it by way of a loan or hire purchase agreement.

If the policyholder paid cash for the car or motor vehicle then this type of insurance policy would not apply. Assuming the policyholder has an outstanding loan or hire purchase agreement, then there’s likely to be a difference possibly a significant difference in cash terms between the amounts that the person paid for the car, and the monetary value given to the person by way of settlement in the event of a claim.

This is simply because when setting a claim for a vehicle or car, the insurance company assesses its market value at the time of loss, which is normally significantly less than was paid for the vehicle. The insurance company will take into account significant wear and tear on the vehicle as well as mileage and other considerations. The gap insurance policy should cover the difference between the two valuations.

There are also likely to be a number of add-on optional extras can be included with a comprehensive car insurance policy which may be included in the price quoted, or may be considered as additional add-on extras. This includes things such as a hire car or rental car, some type of recovery or breakdown service in the event of a mechanical fault or breakdown of the vehicle.

There is likely to be some type of insurance available regarding legal services. This can vary quite considerably as to whether it is simply a call centre giving you legal advice concerning car insurance issues, or it could also extend to providing some type of cover to allow you to pursue what is known as an uninsured loss.

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This is a situation where you may be involved in an accident or incident with another car where the driver of that car does not have any insurance.

At that point it is a consideration whether to pursue that person for the money involved, which would involve you in considerable expense. Some insurance policies offer a type of legal services insurance that would help you with that cost.

There is also the possibility of your car insurance policy including some type of warranty extension for the vehicle covering mechanical and servicing costs. This will depend very much on the age and condition of your vehicle and would probably be subject to an inspection by the insurance company.

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