If you have a car which you are paying for using a loan or any other finance agreement then guaranteed asset protection insurance could be a good option for you. This is a type of insurance which will pay out more or in a different way to standard insurance.
Cars lose value all of the time, they just lose value with age but also their condition is likely to deteriorate and they will lose value that way as well. If you have bought the car with a loan, you may get in to the situation where the car value is actually less than what you still owe on the loan. This could be because the interest on the loan is so high, because the car was expensive when you bought it or just because the value has dropped so much.
This means that if the car is written off in an accident, you may not get enough money paid back to you to pay off the loan, however this type of insurance will make sure that you do. It may also be used to help you to buy a car with equivalent value to the one that you lost or cover the deposit on a new car.
Many people assume that if they have a car written off then they will be able to get a good one in replacement but it is likely that you will only be able to get the current value of the car rather than what it was worth when you paid for it and it could mean that you do not have enough money to buy something as good as what you lost.
No one likes to think about the possibility of their car being written off but it is always good to be prepared for such a circumstance and plan for it happening by either having a good insurance in place or having some savings to help cover the expense.