Gap Insurance You Never Knew Existed
When you hear about gap insurance, it usually has something to do with auto insurance. However, there is awhole variety of coverage that qualifies as gap insurance that is applicable to home, health and life insurance as well.
Insurance policies initially offered by insurers tend to be standard. Regardless of the type of coverage you may be seeking, the policy quote you first receive is based on statistical information and the law of averages for your specific demographic. Since the initial policies are basic, additional coverage in the form of riders can then be purchased by a policyholder as a substitute for what is traditionally thought of as gap insurance. Gap insurance for health, home and life insurance are simply riders you can buy that provide extra coverage.
Types of Gap Insurance
Throughout the industry, gap insurance is becoming increasingly popular and insurance providers are always in the position of gaining a competitive edge by adding options to their portfolio in order to diversify their product offerings. Variations of the trend exist in all types of policies and some of the most common are:
- Earthquake Insurance: If you live near a fault line, earthquake insurance would be a very important type of gap insurance for you. Typical homeowner policies do not cover damage caused by these natural disasters and if you want to cover your personal property, get reimbursed for damage or fund the expenses accrued from being forced to vacate your house, it is a must.
- Flood Insurance: To ensure you are financially protected in case of a flood you will need to opt into a rider that covers your possessions in case this specific type of water damage occurs.
- Jewelry Riders: If your diamond engagement ring is one of your most prized possessions, a gap insurance policy covering the theft of this item is certainly in order. Most insurance companies offer a lump sum payment for jewelry losses due to fire and theft, and it is important that you investigate yours to make sure your special treasures are getting the coverage they deserve.
- Medigap: Medicare is a great government program, however sometimes this medical plan does not fully cover members. You may opt in to buy supplemental insurance policies that will provide you with additional funds to better manage expenses not covered by Medicare. In general there are12 different standardized Medigap policies (Medigap Plans A through L) to choose from, and it will be up to you to review and decide what is best suited for your needs.
- Prescription Drug Gap Insurance: The costs for prescription drugs keep escalating and if you are fearful that you do not have the resources to keep up, this gap insurance will provide you with additional funds for the expense.
- Hospitalization Gap Insurance: Many times your existing health insurance, whether through private insurer or Medicare, automatically provides 100% hospitalization. Only by checking to see exactly what are the terms of your coverage will you be able to determine your need for this coverage. If you do not have a clause allowing hospitalization, then this type of gap insurance is for you.
Just like auto coverage, riders and gap insurance also extend to life insurance policies (both whole and term), loan gap insurance for mortgages, and you can even get coverage for specific parts of your body.
Make sure you review your existing policies and make sure that gap insurance is something that you actually require before purchasing it.