Gap Insurance for Graduates

After four long, challenging years, Ken has finally graduated from a university and has luckily been able to walk straight into his dream job. His impressive new salary has allowed him to take out a mortgage on an attractive new house in the area of his work. However one thing is missing. Ken believes that his days of roughing it out on public transport are over and instead chooses to invest in the new Vauxhall Corsa.

However graduates like Ken, and let's be honest, the majority of drivers in the UK are simply unaware of how disastrous and in some cases, life changing owning a vehicle can be. According to industry experts, the average vehicle can depreciate by up to 50% within the first three years. And no vehicle is immune to this, not even James Bond's Aston Martin. In addition to this, according to Government statistics, 600,000 vehicles are written off each year in the UK. However despite these figures, drivers continue their day to day affairs without the correct form of protection.

Drivers, like Ken assume that their basic comprehensive insurance will protect them from deprecation rates. This is incorrect. Your comprehensive insurer will only pay you the market value of your vehicle at the time it was written off.

This is where Gap Insurance comes into the scene. Gap Insurance is a supplementary form of Insurance and sits alongside your comprehensive insurer. In the simplest of terms, Gap Insurance will pay the difference between the market value of your vehicle when it is written off and the invoice price originally paid.

The three most populist Gap Insurance policy types are: Return to Invoice, Vehicle Replacement and Contract Hire/Finance Gap.

The most basic form of Gap Insurance is Return to Invoice, as shown here:

• Ken purchases a Vauxhall Corsa for £10,000
• Three years later, Ken is involved in a motoring accident that thankfully leaves him unhurt but his Vauxhall Corsa is written off
• Ken receives a settlement payment of £5,000 from his comprehensive insurer
• This means that Ken now has a total Shortfall or Gap as it is commonly referred to of £5,000
• To be able to purchase another Vauxhall Corsa, Ken needs an additional £5,000

Return to Invoice (RTI) Gap Insurance will pay Ken this outstanding Shortfall/Gap of £5,000 and as the name says, return Ken to the invoice price originally paid for the Vauxhall Corsa.

We Hope that this article has allow you to develop an understanding of Gap Insurance and how important it is to your finances.

Get the Best Car Insurance For Rental Vehicles Abroad

It is important to realize that the same laws and regulations in your home country may not apply across the globe. If you are heading overseas for that long overdue vacation, make sure that you understand the difference in legislation between your home country and holiday destination. One important aspect in this regard is car insurance. Unlike in most developed nations, car insurance is not mandatory across the globe. The rental car that you may be driving in a foreign country may in fact be uninsured thereby opening up a host of legal implications for you.

Many travelers place their trust fully in their travel agent, car hire company and hotel concierge. But if you do not ask the relevant questions and do you own research ahead of time, you could walking a legal minefield when you drive abroad. Car insurance not only protects the vehicle owner, it also protects the driver. And if you are buzzing around in unknown territory in a your rental vehicle, you will need as much protection as possible as you may be at a higher risk of an accident than the local drivers.

Rental cars are not your property but the implications of a traffic accident while you are behind the wheel can lie solely on your shoulders. Car insurance should protect you against these eventualities but without insurance, you are open to litigation that could turn a pleasant holiday into a nightmare abroad. It is always important that you ask your rental company if their vehicles are insured. It is equally important to look at any additional cover that can protect you. While your main focus is the cost of vehicle damage, both to the car you are driving and any other cars involved in a traffic accident, you should also ask about public liability.

In the event that you knock a pedestrian, damage private property or injure the occupant of another vehicle in a car crash, you may be liable for the associated costs. This could easily run into large sums of money where permanent disability, death and extensive property damage is involved. Usually the liability in this regards would be paid by the public liability portion of your car insurance policy. But without insurance on your rental vehicle, it is you as the driver who is responsible irrespective of the fact that you are not a citizen of the country.

Most of us holiday on a budget these days. Given the tough economic times, we still want to experience the joys of a vacation abroad. But even if you are on a tight holiday budget, do not forsake essential car insurance cover on your rental vehicle that could financially cripple you or even cause you to see the inside of the local jail. Ensure that you top up with the best car insurance cover that you can afford. You may have to forsake some of the holiday luxuries but at least you can enjoy your vacation without fearing the consequences of an accident.