In addition to liability insurance, which is compulsory, and collision insurance is optional, there are many types of coverage that you can get when you insure your vehicle. These blankets are extra protection, it is possible to choose according to your needs. Here's what you need to know about financial loss insurance, to decide if this type of coverage for you.
The financial loss insurance is especially useful if you lease a vehicle, or if you buy one with a loan. If you have an accident with your new car, or it is damaged by fire or natural disaster, becoming a total loss, you will not get a full refund. Same in case of theft. Your insurer will only reimburse the value of your car when the accident or theft.Accident, provided that you have collision insurance, you will deduct from the refund the amount of your deductible, if you are liable. Since the market value of a car depreciates rapidly immediately after purchase, you may suffer a significant financial loss.
You can protect against such loss by choosing the financial loss insurance. This insurance covers the difference between the value of your vehicle at the time of the accident, and what you still owe on the loan that you have taken at the time of purchase. Suppose you have acquired a car worth $ 25,000. After paying a deposit of $ 1,000, the amount of your loan amount to $ 24,000. You have an accident shortly after your purchase, and at that time the depreciated value of your car is valued at $ 22,000. If your car is a total loss and you are not insured financial loss, your insurer will reimburse you $ 22,000. You will need to pay $ 2,000 on your loan for a car you can not use. By cons, if you are covered by a blanket of financial loss, the $ 2,000 difference between the loan amount and the market value of your vehicle will be paid.
If you rent a vehicle, you are responsible for the cost if an accident or theft occurs. Insurance financial loss will be particularly useful in this case, since the cost of renting a car is lower than its purchase price. The difference between your rental costs and the total cost of the car will be covered. Many leases require the tenant vehicle to acquire a financial loss insurance, protecting both parties against losses in case of accident or theft.
The financial loss insurance is a good investment for you if you decide to rent a car. It will also be useful in case you decide to buy a car with a loan. However, if your down payment and your monthly payments are calculated so that the price you have to pay either for a long period of time, less than what you have already paid on your loan, you should not need financial loss insurance. Talk with your insurer to be sure to make an informed choice.
The financial loss insurance is especially useful if you lease a vehicle, or if you buy one with a loan. If you have an accident with your new car, or it is damaged by fire or natural disaster, becoming a total loss, you will not get a full refund. Same in case of theft. Your insurer will only reimburse the value of your car when the accident or theft.Accident, provided that you have collision insurance, you will deduct from the refund the amount of your deductible, if you are liable. Since the market value of a car depreciates rapidly immediately after purchase, you may suffer a significant financial loss.
You can protect against such loss by choosing the financial loss insurance. This insurance covers the difference between the value of your vehicle at the time of the accident, and what you still owe on the loan that you have taken at the time of purchase. Suppose you have acquired a car worth $ 25,000. After paying a deposit of $ 1,000, the amount of your loan amount to $ 24,000. You have an accident shortly after your purchase, and at that time the depreciated value of your car is valued at $ 22,000. If your car is a total loss and you are not insured financial loss, your insurer will reimburse you $ 22,000. You will need to pay $ 2,000 on your loan for a car you can not use. By cons, if you are covered by a blanket of financial loss, the $ 2,000 difference between the loan amount and the market value of your vehicle will be paid.
If you rent a vehicle, you are responsible for the cost if an accident or theft occurs. Insurance financial loss will be particularly useful in this case, since the cost of renting a car is lower than its purchase price. The difference between your rental costs and the total cost of the car will be covered. Many leases require the tenant vehicle to acquire a financial loss insurance, protecting both parties against losses in case of accident or theft.
The financial loss insurance is a good investment for you if you decide to rent a car. It will also be useful in case you decide to buy a car with a loan. However, if your down payment and your monthly payments are calculated so that the price you have to pay either for a long period of time, less than what you have already paid on your loan, you should not need financial loss insurance. Talk with your insurer to be sure to make an informed choice.
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