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Do you owe more on your car than it’s worth?

Currently, car loans may last as long as four to six years and leases are becoming more expensive. Whether your vehicle is a coupe, sedan, van, sports utility vehicle, hybrid, or truck, your vehicle’s value will depreciate very quickly. A rapid loss of actual value accompanied by a longer loan obligation spells trouble.

It isn’t unusual for the amount of the unpaid loan and lease balance to become much larger than the vehicle’s value. This disparity exists over much of the loan or lease period. Making matters worse is that this gap is usually only discovered after a total loss. After your insurer pays its obligation, you may have to pay the bank or leasing company thousands of dollars out of your own pocket. The situation is an unfortunate side effect of the need to extend financing to accommodate extremely expensive vehicles. However, there are a couple of solutions to the dilemma.

The Auto Loan/Lease Coverage Endorsement

This optional coverage is available from a variety of insurance companies. The form provides coverage for the following:

  • Leased vehicles – Reimburses you for the difference between the amount due under the terms of the lease and the actual cash value of the auto in the event of the auto’s total loss.
  • Owned vehicles – Pays any outstanding indebtedness incurred by you for that financed new vehicle in the event that there is total loss or damage to the vehicle and the amount due under the finance agreement is greater than the actual cash value of the automobile.

On smaller, partial losses, an insurer will normally pay to have the damages repaired or parts replaced, and the lease or loan gap coverage option is not a factor.

Car insuranceExclusions

Generally this optional coverage excludes items such as overdue lease payments, penalties (for excessive use, abnormal wear and tear, or high mileage), security deposits, costs of warranties or various types of credit insurance, or carryover balances from a previous lease.

Auto Replacement Cost Coverage

For an additional premium, a new car owner may buy coverage to settle major losses based on the vehicle’s replacement cost rather than its depreciated value. There are some limitations, such as:

  • the coverage is usually only available for new or nearly new (six months or less) cars
  • there may be a maximum dollar amount that applies to a total loss
  • the coverage may only be available for the first few years of the car’s useful life

If you have a newer vehicle and are concerned that you could suffer a large out-of-pocket expense if your car is totaled, you should talk to a qualified insurance expert at Smart Insurance to answer your questions. You may find that the extra protection is worth the extra cost. Let Smart Insurance provide smart coverage options to protect you.

Do You Have the Correct Coverage for Your Business Automobiles?

Many businesses are exposed to the financial consequences of their ownership, use or maintenance of vehicles used in their operations. Most coverage needs can be handled by a business auto policy (BAP) or similar form which cover operations such as:

  • Product or food delivery
  • Transporting business products to wholesalers or retailers
  • Retail product delivery to consumers
  • Carrying persons for short, intermediate or long distance routes
  • Picking up customer items for cleaning, repair, storage, etc.

Image result for business automobile insurance

Coverage is flexible. It may be purchased as a separate policy or as part of a package of coverage that can also protect buildings and business property (equipment, furniture, etc.). A BAP generally offers:

Liability Coverage–protection for physical injury to other persons or their property because of an accident related to your covered vehicle, including legal defense cost or expense.

Comprehensive Coverage–handles loss from any cause except collision. A limited, less expensive option is available. It only protects against a set of specific causes such as fire, lightening, explosion, vandalism and several others

Collision–takes care of damage from crashes with another object or overturn of the vehicle

Towing And Labor Costs–handles expenses for moving disabled vehicles

Loss of Use/Rental Vehicle Coverage–if you damage a rental car, this option helps to reimburse the rental company for income it loses because the vehicle is out of use. Also, there may be limited coverage for injury or damage that you cause to others while using a rented vehicle anywhere in the world.

Typically, a business auto (or similar form) bars coverage for the following:

  • any injury/damage that you expected or intended
  • responsibility for damage you assume under a contract
  • losses that should be handled by a Workers Compensation, Disability Benefits or Unemployment Compensation Law
  • Bodily Injury to an employee caused by a Fellow Employee
  • Damage to property that is in your Care, Custody and Control
  • Any bodily injury or property damage that occurs because of Pollution
  • Any loss that is related to racing, demolition or stunts

Are you protected against business auto losses? Drive over and discuss your situation with the folks at Smart Insurance today. The trip will be worth it.