A client of our firm recently purchased a brand new car. She performed online research to make sure she was getting the best price available, she spent more time researching the best car loan rates, she spent hours at the dealership with the salesman, and finally purchased the perfect car. She also thought she received a great price for her used trade-in vehicle. She was told that her old insurance policy would cover her new car, so she was even able to take the car home that same evening.
At $30,000.00. she had purchased a lot more ďcarĒ than she thought she could afford, but the payments seemed feasible, and after all, this was the car she had been wanting for the last few years.
Several months later, while the ďnew car smellĒ was still in the car, she was on her way to her friendís house when the unthinkable happened.
She was rear-ended by a careless truck driver. Thankfully, she was okay. Her car on the other hand, was totaled.
After speaking with her insurance agent, she turned off her cell and came to a sickening realizationÖ she had just lost $6000.00.
How could this possibly happen?
A new car will likely lose up to 20% of its value within its first year? In fact, the moment a car is driven off the lot, there is a significant decrease in value. As a quick rule of thumb, a car will lose between 15% and 20% of its value each year according to Bankrate.com.
This is what you should know to protect yourself. As an example, if you purchase a brand new car for $30,000, there is significant depreciation the moment you drive off the lot. One week later, if you happen to be the victim of a collision, and your car is considered a total loss (most insurance companies will consider a car a total loss if the repair costs exceed 70% of the carís value), the responsible driverís insurance company is only obligated to pay you the carís bluebook value.
The blue book value of your brand new car may be $27,000 (one week after you drove it off the lot). However, your total car loan debt may be $30,000. Even though you were the victim in the crash you will be stuck paying the remaining $3,000 car loan. This is where gap insurance would be applicable.
Many insurance carriers offer relatively cheap protection from this potential disaster, known as gap insurance. Gap insurance will pay the difference between your carís blue book value and the amount owed on the loan.
Gap insurance is fairly cheap. It is often around $10/month.
Gap insurance is not recommended for everyone. In some cases, there may be a recommendation against gap insurance.
To find out more information, or to see if such coverage would be right for you, contact the law offices of Rowe, Weinstein &Sohn, PLLC. Periodic newsletters and blogs such as these are issued to educate our clients, in hopes of avoiding typical pitfalls and loopholes that may cause economic injury. Better check out http://www.rockvillecaraccident.com now!
Article Source: http://www.abcarticledirectory.com
Joshua S. Berman focuses his practice on civil litigation. He is an attorney for our Personal Injury Division and has focused his practice on helping victims of traumatic accidents seek justice. He has represented hundreds of victims and recovered millions from insurance companies.
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