Gap Insurance

There are certain situations where gap insurance is invaluable. A great example of gap insurance is when you have just bought a new car or leased vehicle. Let’s say the price tag on the showroom floor is $50K, its important to note that deprecation starts as soon as you pull off the showroom floor. So for our example you researched and got the best deal possible on the car, your financing has been completed through your lender and you head out to enjoy your new ride.

So you stop at the stop sign and someone is not paying attention and smashes your car. After the accident your insurance company writes off the car as totaled but the pay off value from the insurance company is only $35K. Now you are stuck with out a car and on top of that you owe $15K, which is the difference between the purchase price, and the insurance company pay off amount. Gap insurance would cover the difference (the $15K) or gap in the money owed to the bank. Its important to discuss with your insurance agent all the details involved with purchasing gap insurance. Another type of gap insurance that is prevalent in the insurance industry is travel gap insurance.

Travel gap insurance

Operating under the same premise as car gap insurance, travel gap insurance has a lot of different variables to consider when you are deciding on which travel gap insurance is right for you. There are a few different situations where a person would elect to get travel gap insurance. When you are referring to travel gap insurance it is implied that a major component of that travel gap insurance is related to health care coverage during your travels. For instance, students traveling abroad or backpacking through Europe are great candidates to purchase travel gap insurance because they provide the basic coverage at an affordable price.

Another good example would be an executive that is traveling overseas on a work assignment and would like to take their spouse along. The executive is most likely has coverage through work, however most health insurance providers do not have agreements in place to handle medical and other types of coverage when a policyholder has an emergency overseas. When you are researching travel gap insurance be sure to understand exactly how the insurance coverage works, are there enough participating doctors and hospitals where you will be traveling. In addition ask about other issues such as what is the process to evacuate. Is the policy void if you have a pre-existing condition and can I still get travel gap insurance if I only go away for a few days.

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