What you should know about financial loss insurance
What you should know about financial loss insurance
In addition to liability insurance, which is mandatory, 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 whether this type of coverage you want.
The insurance financial loss will be particularly useful if you rent a car, 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 reimburse only the market value of your car at the time of the accident or theft. In case of accident, provided that you have collision coverage, you must deduct from the refund the amount of your deductible, if you are liable. Since the value of a car depreciates rapidly immediately after purchase, you may suffer a financial loss.
You can protect yourself against such a loss in selecting the insurance financial loss. This insurance covers the difference between the value of your vehicle at the time of the accident, and you have to repay the loan that you acquired 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, at which 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'll have to pay $ 2,000 on your loan for a car that you can not use. By cons, if you're covered by a blanket of financial loss, the $ 2,000 difference between the amount of your loan and the value of your vehicle will be paid.
If you rent a car, you are responsible for the cost if an accident or theft occurs. The 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 lessee of vehicle to purchase insurance financial loss, thereby protecting both parties against losses in case of accident or theft.
The financial loss insurance is a very good investment for you if you decide to rent a car. It will also be useful if you decide to buy a car with a loan. However, if your deposit and your monthly repayments 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 require insurance for financial loss. Talk with your insurer to be sure to make a choice.
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