With the convenience of our daily conduct is the ability and disadvantages of being involved in a car accident. A total loss is possible, depending on what you are driving and the extent of damage. But what is a total loss? And do you know how to protect yourself against the financial consequences of such a loss?
The insurance industry generally defines a total loss of vehicle when the cost to repair the damage suffered by the loss reaches or exceeds 75 percent of value of the vehicle ( LCA) and / or is otherwise impossible to repair. LCA is essentially defined as replacement cost less depreciation. Virtually all vehicles depreciate with each passing year and with increasing mileage. The purpose of insurance is to indemnify, or in other words, put back in the same position they were before the loss. By paying the value of real money, you are paid for the value of the vehicle based on its current condition, age and mileage. While this is a good thing, there are two better alternatives available
The first alternative is something most people have heard and applied to a financed vehicle. it is called the protection of guaranteed assets or coverage of GAP. GAP covers the outstanding balance of your loan (usually up to 150 percent) compared to the LCA. This saves you from having to make payments on a vehicle you own or roll over the outstanding balance in the funding of a replacement vehicle. All but pays for itself if you lose your vehicle a total loss and you owe more on your car than it's worth. Generally, you can buy it from the dealer when you buy your vehicle or your insurance company, if any, for an additional premium.
Speaking of replacement vehicle, it is coverage available in some auto insurance policies that just as the so-called replacement coverage. This replaces the loss with a new vehicle of the same make, model and equipment as if it were new, no depreciation for mileage or age. Replacement guarantee generally applies only for either five vehicles. This looks like a very good deal because it is! I think it is well worth the small extra premium it typically costs to have this coverage. As a claims adjuster, I have seen many situations where an insured was upside down on their vehicle, but unfortunately they had either opted not to or were unaware of the replacement coverage, they don ' GAP had bought at the dealership.
Whether you are planning to buy a new vehicle or already have a pretty new vehicle, it is beneficial to look at these two types of coverage. It may well save you a lot of money and frustration in case of total loss. Talk to your independent agent to make sure you have the necessary safeguards in place.
The benefits described here are in the most general terms, and subject to the conditions and actual policy exclusions. For the actual wording cover, conditions and exclusions, see the policy or contact your agent.
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