Insurance Helpline | No information gap on GAP Insurance!
Question: Is gap insurance available in Jamaica? If so, which company offers the best deal? R.T., Kingston 7
INSURANCE HELPLINE: This column presents me with many opportunities to learn new things to share with readers. These thingamajigs cover a variety of topics. They are seldom limited to insurance.
Last week was no different. However, I also learnt something new about insurance, specifically, about guaranteed asset protection (GAP) insurance. Before that, I did not have a clue that this coverage existed or, until last Monday, that it was locally available.
Those who read last week?s Sunday Gleaner will know that GAP insurance is associated with the purchase or sale of new vehicles. There are risks linked to this which are not uncommon or, for that matter, imaginary.
A few weeks ago, a consumer who lives in a rural parish, contacted me. His vehicle was stolen at gunpoint. It was insured comprehensively. A well-known institution provided the financing. For reasons that are not too clear, his insurers refused to pay the claim.
The consumer ended up without a vehicle (the collateral for the loan), with no money from his insurers to buy another vehicle and having to find the funds each month to service the loan for another three years.
The lender, on the other hand, was still sitting pretty. It had taken steps, presumably via the loan agreement, to protect itself. Like Shylock ! the relentless and revengeful moneylender in Shakespeare?s Merchant of Venice (to quote my search engine) ! it would still get its pound of flesh!
I do not know enough about GAP Insurance to say whether the coverage would have provided that particular consumer with the protection he obviously did not have or what was the root cause of his insurance problem. The Monday after my article was published, I received a telephone call. It was from an official of GK General Insurance. Gap Insurance, he said, is locally available. Written details were sent to me the next day.
The email read: ?We are writing in response to the recent article in your Insurance Help-Line entitled ?Information Gap on GAP Insurance?, published Sunday, March 13, 2016.
?GK General Insurance Company welcomes the timeliness of this article and is pleased to advise that GAP Insurance is in fact available (but) very new to the Jamaican market ... In summary, GAP Insurance is a product, which covers the difference between an insurance settlement after a total loss (whether by theft or as a result of an accident) and what is owed to the financial institution.
?(The following illustration should make it clear). A customer receives 100% financing for a $3,000,000 vehicle. Fifteen months later the vehicle is written off.
The motor insurer settles (the claim for) $2,000,000 (based on the pre-accident value) but the customer still owes the lease or finance company $2,750,000 (which would include interest payments).
The GAP policy will pay the $750,000 shortfall direct to the lease or finance company so that the (loan) agreement can be closed.
?In addition to the shortfall cover outlined above ... GAP Insurance policy also provides other benefits including:
1. New Loan Fee Benefit Following the GAP settlement, once the client is refinancing a vehicle through the same financial institution, we will contribute a fixed amount to complete the new loan process.
2. Instalment Benefit Once a total loss claim is pending, we will take over the loan payment for up to three months or up to a (monetary) limit.
3. Excess Protector Benefit A cheque will be made to the client to cushion the burden of the excess (typically five per cent of the vehicle?s market value) which will be deducted by the insurer.
?Importantly, the GAP coverage period is for the lifetime of the loan, and the premium charged is a one-time payment at the commencement of the loan. The premium rates are affordable and are determined based on the value of the vehicle.
?It is to be noted that regardless of your insurer, you can get GAP Insurance ... The only condition is that the vehicle should be financed and that there is a primary comprehensive insurance policy in place.?
GK General?s product development efforts should be applauded. The company appears to be on a mission to grow its revenue with new products that help consumers solve problems and minimise risk. Also, based on my recent interactions with some of its representatives, the company seems to be very open to new ideas. Two thumbs up!
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: email@example.com