The Importance Of Car Insurance In The Recession

Friday, 20. February 2009

One of the side affects of the current recession and the drop in value of used cars are the poor settlement figures being offered by insurance companies as a result of total write offs compared to the settlement figure required by the finance provider. Another involves the early settlement figures being asked for by lenders when drivers wish to early terminate a finance agreement, this could be as a result of redundancy or illness. The early settlement figure can be extremely high compared to the market value of the car, especially in the early stages of the agreement, which results in a huge deficit. These two situations can be quite a worry. However, there are two insurances that can remove the losses, one is GAP insurance, which stands for General Asset Protection and pays the difference between what the funder requires as a settlement and what the insurance company is prepared to pay. I have seen costs for this type of GAP from £80 to £220. There are other types of GAP available such as back to invoice (will take you back to the price you paid for the car if you took out a personal loan, HP or bought for cash) or replacement vehicle which means they replace the car with an identical car. The other insurance to consider is Early Termination Insurance which covers you for redundancy, change of job, illness and various other reasons for terminating your lease or finance agreement early. It will enable you to hand the car back to the funder or settle the finance without being out of pocket but check the terms and conditions attached to each policy, they can vary considerably as can the costs which are calculated on a car by car basis. I’ll be looking into providers in due course, in the meantime check out the rates on the Internet. By Graham Hill