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Insurance is a term used to refer to an action, system, or business where financial protection (or financial compensation) for the soul, property, health and so forth get a replacement from unpredictable events that can occur such as death, loss , damage or illness, which involves paying premiums regularly within a certain period of time instead of a policy that guarantees such protection.

The term “insured” usually refers to everything that gets protection.

Basic Insurance Principles

In the insurance world there are 6 basic principles that must be met, namely:

• Insurable interest, namely the right to insure, arising from a financial relationship, between the insured and the insured and legally recognized.

• Utmost good faith, which is an action to disclose accurately and completely, all material (material fact) facts about something that will be insured whether requested or not. The meaning is: the insurer must honestly explain clearly everything about the extent of the terms / conditions of insurance and the insured must also provide clear and correct information on the object or interest insured.

• Proximate cause, which is an active, efficient cause that causes a chain of events that results in an effect without the intervention of one who starts and actively from new and independent sources.

• Indemnity, which is a mechanism by which the insurer provides financial compensation in an effort to place the insured in the financial position he had just before the loss occurred (KUHD article 252, 253 and affirmed in article 278).

• Subrogation, namely the transfer of claim rights from the insured to the insurer after the claim is paid.

• Contribution, which is the right of the guarantor to invite other guarantor who both bear, but do not have the same obligation to the insured to participate in providing indemnity.

Type of Insurance

1. Life Insurance

This type of insurance is known to provide financial benefits to the insured for his death. The payment system for this type of life insurance varies. There are insurance companies that provide payment after death and others can allow the insured to claim funds before his death.

Life insurance can be purchased for self-interest and on behalf of the insured alone or purchased for the benefit of a third person. Even life insurance is also known to be bought in other people’s lives. As an illustration, suppose a husband can buy life insurance that will provide benefits to him after the wife’s death. Parents can also insure themselves against the child’s death.

2. Health Insurance

This type of insurance is also quite well known by the people of Indonesia. Health insurance is an insurance product that handles the health problems of the insured because of an illness and covers the cost of the treatment process. Generally, the cause of the insured’s illness which can be borne by the insurance company is injury, disability, illness, until death due to accident.

Health insurance is also known to be bought for the benefit of the insured or the interests of a third person. Private health insurance companies such as Prudential, Allianz, AIA, Cigna, and Manulife are among the big names that provide a variety of insurance products to suit the needs of the Indonesian people and are widespread throughout the world.

3. Vehicle Insurance

The most popular vehicle insurance in Indonesia is a type of car insurance that focuses on injury coverage to other people or against damage to other people’s vehicles caused by the insured. This insurance can also pay for the loss or damage to the insured motor vehicle.

Vehicle insurance is one of the general insurance products. This type of insurance had become a boom when the riots broke out in May 1998 because the incident made people’s interest in protection ownership for private vehicles increase dramatically.

The financial site has partnered with well-known insurance companies in Indonesia so you as a customer can compare the best car insurance products with low rates.

4. Education insurance

Dizziness with children’s education costs? This type of insurance will help you overcome. Education insurance is the best alternative and a solution to ensure a better life, especially in children’s education assets. The cost of the premium that must be paid by the insured to the insurance company varies according to the level of education to be obtained later. Understanding the importance of using education insurance for children is now a matter of concern for parents. The high cost of education and other conditions that exacerbate the economy such as the weakening of our currency against the US dollar affect the cost of education for children later. Realizing that this clearly will burden parents, it is not uncommon for parents now to choose to have education insurance. So, education insurance can be classified as the types of priority insurance too, right? You will certainly be helped in taking care of the child’s future.

5. Travel insurance

Maybe for those of you who often travel or travel are familiar with this type of insurance. The various types of insurance also create a variety of protection for travelers. Overall, the function of travel insurance is not much different from the ordinary insurance function as a form of protection for customers with a short period of time that is for the premium buyer to travel until returning home. Benefits and protection that will be gained from having travel insurance include obtaining protection and coverage for accidents that affect premium buyers, personal accident benefits, dependents for emergency medical expenses, repatriation of bodies, medical evacuation, to protection of luggage that has a risk of being lost. or damaged.

6. Business insurance

For those of you who have a business field, this type of insurance is important to consider. In addition to the types of insurance that involve individual protection, insurance that protects businesses is also needed. Business insurance is a protection service against damage, loss and loss in a large amount that may occur in one’s business. This insurance provides compensation for damage caused by fire, explosion, earthquake, lightning, flood, hurricane, rain, collision, until riots. Insurance companies usually offer a variety of benefits from business insurance such as protection of employees as business assets, investment and business protection, comprehensive life insurance for all employees, to health insurance protection packages for employees.

Advantages of Insurance Companies

Insurance companies also benefit from investment. This is obtained from the investment premium received until they have to pay the claim. This money is called “float”
Insurers can get profit or loss from float price changes and also interest rates or dividends in float. In the United States, property losses and deaths recorded by insurance companies were US $ 142.3 billion in the five years ended 2003. But total profits in the same period were US $ 68.4 billion, as a result of the float.

Insurance Refusal

Some people consider insurance to be a form of betting that applies during the policy period. The insurance company bet that the buyer’s property will not be lost when the buyer pays the money. The difference in fees paid to insurance companies against the amount they can receive if an accident occurs is almost the same as if someone bet on horse racing (for example, 10 to 1). For this reason, some religious groups including the Amish avoid insurance and depend on the support received by their community when disaster occurs. In communities where close and supportive relationships where people can help each other to rebuild lost property, this plan can work. Most people cannot effectively support the system as above and this system will not work for big risks.

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25 Replies to “Is AUTO LOAN GAP INSURANCE a RIP OFF at the Car Dealer? (How to buy a Vehicle) | My Insurances Info”

  1. Well done! For the benefit of viewers, here is the written explanation of what GAP insurance is as found on Wikipedia: Guaranteed Auto Protection (GAP) insurance is also known as GAPS and was established in North American financial industry. GAP insurance is the difference between the actual cash value of a vehicle and the balance still owed on the financing (car loan, lease, etc.).[1] GAP coverage is mainly used on new and used small vehicles (cars and trucks) and heavy trucks. Some financing companies and lease contracts require it.[2]

    GAP insurance covers the amount on a loan that is the difference between the asset value and the amount covered by another insurance policy.[1] Some GAP policies also cover the deductible.[3] This coverage is marketed for low down payment loans, high interest rate loans and loans with 60 month or longer terms. GAP insurance is typically offered by a finance company at time of purchase. Most auto insurance companies offer this coverage to consumers.[4] GAP insurance is usually paid upfront and, for that reason, one is eligible for a refund if he/she sells or refinances their vehicle.[5]

    There are two ways of getting GAP coverage. The first type is an insurance policy sold by a broker. The second type is a waiver agreement sold by a Finance & Insurance Manager. The first is regulated by the insurance industry, the second is unregulated.[citation needed] In either case coverage is usually the same and sold as a soft product through the car dealership. Coverage is usually financed along with the lease/loan. Claims are subject to a total loss. The total loss is usually determined by the primary insurance company’s third-party appraiser.[citation needed]

    Exclusions to GAP insurance vary by country or state. Some exclusions include a maximum loss limit of $50,000 while others require a loan term of less than 84 months.[citation needed] GAP is an optional purchase; however, many states in the US require that a car dealership offer GAP at the point of purchase. Other states require insurers to offer GAP if a client requests it.[6] States such as Louisiana require that the purchaser sign a disclosure document as proof.[7] Although GAP is optional, some finance companies require GAP as a condition to obtaining a loan.[2] The Truth in Lending Act excludes GAP premiums from financial charges if GAP was not required by the creditor, the premiums were disclosed in writing, and the consumer provides a written request for the insurance.[

  2. Car dealers have pushed GAP insurance on car buyers for many years. What some of them will say is that their GAP "is the best," as if a car dealership is the only entity to distribute quality products. With consideration of the many scams, lies, and outright deceit that happens at far too many car dealers, these kinds of statements are quite laughable. There is a difference between some dealer GAP policies, and a GAP policy that you can buy from a typical insurance agent. "Normal" GAP is designed to cover excess loan balances created by high interest, longer term loans, higher miles driven in a year, etc. Dealer GAP is designed to cover every rotten piece of advice they give you in a car deal… like "Yes, you can roll that $5,000 negative equity right into this deal. No problem"… or "Here's our menu of BEST SECURED options you'll need to protect your investment." As if buying a vehicle that rapidly depreciates and is loaded with tons of worthless fluff would be considered an 'investment' by anyone with an intelligent mind. Since dealer set their customers up with financial ruin, they offer a product to prevent the unthinkable: A customer getting stuck with a totalled car, and the thousands of dollars of worthless "product" they packed into their car deal. So, when a dealer says their GAP is different, believe me when I say that the only way you need CAR DEALER GAP is if you were stupid enough to accept all of their advice and suggestions during your car deal, and in your previous car deal. If you aren't that stupid, then just buy GAP at your local insurance company (if you even need it).

  3. It's always nice to see one of the car dealers (or dealer employees) show up and click dislike on our informational videos. It always lets me know that we've hit the nail on the head. I'm sure you're going to love the next video coming out on extended warranties. Make sure you watch for it!

  4. It's just kind of funny, because like, yeah you are right in some ways, although GAP through my insurance provider was offered at an awful 12 a month vs the dealer gap.. so idk wtf you're on about. But also like, people have straight asked me, as a sales consultant, the same type of question, and I just straight tell em; Because as soon as there is one owner, and you drive this off the lot, the banks, the insurance companies, you name them, are liabilities towards their investment. The less you drive them, the more you service them, the happier they all are. I'm just straight honest with them, and I've heard my finance managers say that to customers as well. It's just a fact. I don't control it and neither do they. It's just how the industry is.

    Also, it's like you said previously, if they can get it through their insurer more quickly, more power to them. They also have the option of removing it altogether down the road. Service plans can be nice for people who aren't frugile and want to make sure their scheduled maintenance is getting done. Although paying interest on oil changes just sounds stupid to me, it is seen as a convenience for some. I get customers all the time telling me that they NEED the service plan, they WANT the extended warranties, and they proceed to tell me how great their experiences with us have been. Because at the end of the day, if the end of their loan term wraps up and the dealership can just pull all of your service records up, like we've seen this vehicle at least a good 30 times during your ownership, we know what condition it is in. We know it's been taken care of because WE'VE taken care of it… That's worth a lot more to a dealership, and in the end, I've seen some great deals happen because these plans have done just what was intended; Protect your investment and hold value.

    Again, next to none are for me, because I don't want to pay interest on stuff that I should be naturally doing anyways, but for some it's worth the cost.

  5. Do you have questions about dealer doc fees (document fees)? Do you have any idea how much you paid in doc fees on your last car purchase? With questions coming in daily on dealer doc fees, we published a new video to help car buyers understand how to handle this "money maker" for the dealership. I hope you enjoy it: "What is a dealer Doc Fee? How much should you pay?" Find it here:

  6. I have to disagree with much of what you say. I do agree that longer term financing is a bad thing for the consumer, but the reason is not just the dealers issues, its driven by consumer demand for more car than they can afford. Second, negative equity and no cash down is the biggest issue and I agree consumers should stop trading prior to building equity. That said a dealers GAP Waiver is a better option for most consumers.

    First off what a dealer sells is not GAP Insurance, it is a GAP waiver. This waiver is by far better than any personal lines GAP in the market today. Here are some examples:

    1. A dealers GAP covers up to 150% of MSRP vs. the insurance companies 110%
    2. A dealers GAP covers negative equity carry over from the previous loan vs and insurance company that will not cover.
    3. A dealers GAP is for the full term of the loan vs an insurance company who only provides up to 3 years.
    4. If you change auto insurers most other carriers will not provide you GAP since the car is not new
    5. A dealers GAP waiver covers up to $1000 of the customers deductible vs. and Insurance companies
    6. The average annual cost for a GAP waiver is less than $100 per year and if you trade prior to the full term of the loan you will receive a prorated refund. So the total cost you state would only apply if the customer keeps the car for the entire loan term.

    Overall at this time the best deal is to purchase a dealers GAP waiver if the customer finances with the dealer.

  7. Gap is a scam engineered between insurance companies and lenders. If you total your car, your insurance should be obligated to pay YOU the amount for the current value of a similar car (and assure you use that fund to purchase one), or find a replacement one. Instead the law requires the insurance to pay the lienholder. But there is nothing in principle that should require your insurance company to pay the lienholder, and not you, and it actually leads to more problems. It puts the consumer in debt, and without a car – which is exactly what the system wants. The problem was that people were getting big checks from insurance companies after totaling their car, and instead of buying replacement vehicles, they were wasting it on gambling and frivolous luxuries. Without a car, it's unlikely such consumers made good to pay their lenders back, what they owe. So in many instances lenders will lose money, if insurance writes a check to the consumer. But lenders will also lose money, and often unlikely to see the gap amount, if the consumer doesn't have a replacement car. But if the insurance just replaced the totaled car with a similar one, or provided a payout in the current value of the car (provided the consumer agree to use that money to purchase a similar vehicle) – then it seems, everyone would be happy. Why should the lender care if I am in an identical replacement vehicle, as long as I am making due payments? Even if they have to repossess the car at some point, they are taking back a vehicle that would be hypothetically identical, to the (then totaled) vehicle they originally provided a loan for.

  8. I am stock with GAP insurance bcause the loan officer ( BOcK toyota) North Attleboro, MA,refused to cancel it- I was misled about cancellation policy and they forced me to purchase Gap insurance- I tried to cancel since day one, i made several trips to the loan officer then his supervisor signed cancellation 3 months later meaning after the deadline – in adfition, they added tire insurance+ other warranties totaling $5000 exrra on a 84 month loan

  9. this video is idiotic. they're not loaning you more money than what the car is worth. the problem is that if you only make the minimum payments, the vehicle may depreciate in value quicker than the loan value (and if you wreck it – it becomes worthless.) that's determined by what someone is willing to pay for a used vehicle. the dealer/manufacturer has no control over that. if you wreck the car and then quit making payments on it, you have defaulted on the loan. the seller/financier knows you will most likely quit making payments on an undrivable car and so requires you to have insurance to cover the difference between what is owed and what the wrecked car is now worth. it's not a "rip off" nor "scam." it's simply a prudent financial requirement. a friend of mine wrecked his truck and was told by the insurance company that his loan was to be paid in full. I don't think he even knew he had gap insurance. this was good for the lender since my friend was broke as hell and would not have continued making the payments. also, I've never heard of anyone buying insurance from a car dealer.

  10. Never buy GAP, that's waste of money. Always pay my car with cash or take no more than 36 months loans and try to pay for 12-16 months. Even something happen and be negative on loan have saved much more money of not taking GAP on all my previous cars.

  11. I have gap insurance I got it from the dealership I want certain options the sales guy had to go to another dealership to get but I drather have it just invaded something does happen

  12. From recent experience I purchased GAP insurance through Honda that was 500 bucks. Total losses my motorcycle and still owed 600 bucks. They kicked the claim due to to small of a balance. I kid you not when I was told this I surely thought it was a joke. But GAP insurance use every resource possible not to pay the claim.

  13. Thank you so much Kevin Hunter I'd like to take advice I had brushes a tundra last year and they won't approve me without paying $2,550 extra for warranty on that truck and I had 72 month payment I finish my payment in 15 month and ask them to refund the warranty. they give me 1400 I haven't cashed that check yet I just got it I'm trying to go back to them and see if they wll give me my whole refund I need to know is this how things work are they have to pay the full amount back soonest the car is still on that minefactory warranty that we never use their warranty yet.
    Even if they have to go by frame time I didn't even use a 24% of the frame time if they want to be fair they should take 24% net 45% let me know if you can appreciate it thank you so much

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