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Auto Insurance Questions And Their Answers

a) What is an exclusion and why do I need it?

Exclusion is a clause in your car insurance policy that specifically excludes someone from being covered by your policy due to different reasons. The exclusion can be inserted into your policy upon your request or the auto insurance provider. There are various types of car insurance exclusions that are for different purposes. A driver exclusion goes to exclude a particular person e.g. your teenage son or daughter or any person with access to your car from coverage by you policy. Insurance companies will also write up an exclusion clause in the event you have overlapping insurance policies with two or more insurance carriers. They will state the specific coverage and amount each will offer. An exclusion may also be invoked for employees stating the insurance carrier will not compensate if at the time of the accident an employee was driving the vehicle. In other cases the insurance company may also predetermine via an exclusion clause in your policy that they will not offer collision coverage if at the time of the collision you were drag racing.

b) What is rental reimbursement coverage and how does it affect me?

This is an optional benefit in the auto insurance industry and entails coverage for the cost of a car after being involved in an accident resulting in damage or destruction. It is not a requirement in your policy but creates convenience in case you do not have a back up car to get to work or take your kids to school before your car gets repaired. You may achieve this by renting a car from a rental company approved by your insurance provider and bill them directly or you can rent from any rental company and present them with receipts while claiming a reimbursement. It is usually a per day per accident coverage and once you reach the agreed limit, the insurance company will not pay for the difference. It however advisable to rent a car that is not necessarily the same to your car that is in repair. Choose a cheaper car because this will keep the cost of insurance at a low pending your car’s arrival.

c) What is gap insurance?

It is basically the monetary bridge between what you owe on a motor vehicle loan and what the estimate of the car’s worth is. Also known as loan/lease insurance, it is beneficial to people who deal in buying cars or leasing them. When a car accident occurs, the insurance company will calculate what the worth of the car was just before the accident and not at buying price meaning there will be a difference. Gap insurance will cover for the difference because you still have to payoff the full amount as per your loan agreement.

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