Read on to Know What Gap Insurance is All About
Put simply, gap insurance is something that covers the gap between the actual value of your car at the time of the accident and the amount of money you owe on your vehicle. Most especially if you have a brand new car, purchasing gap insurance coverage can help to spare you from shelling out a huge sum of money for a car that you no longer have.
Gap insurance is optional - it's completely up to you whether or not you would like to purchase it. You may choose to buy it as an add-on to your collision insurance policy.
However, do take note that it's not all the time that this type of auto insurance coverage is not obligatory for a car owner like you to purchase. For instance, your lender may require you to have gap insurance if you have financed your prized possession with a car loan. If you are leasing your car, on the other hand, the gap insurance may already be included in the overall cost. In order to be sure, read the coverage paperwork carefully.
What makes gap insurance highly beneficial most especially if you are the owner of a brand new car is this: a new car tends to decrease in value very quickly. Did you know that the value of your brand new car has already decreased by a whopping third as soon as you drove it off the lot of your trusted the car dealership? And in the first year of owning it, your car's value had dropped by 40%. A car usually loses 60% of its value on the 3rd year mark!
There are actually so many things that can affect how much your car's value drops. Some of them include the model of your car, the number of miles it has covered, how old it is and the condition it's currently in.
Just imagine how devastating it would be to your heart and most especially pocket if you lost your car and your auto insurance company would pay just a small fraction of the cost of your car when you brought it - the auto insurance company will base the amount on the actual value of your vehicle at the time of the accident and not on how much money you shelled out back when you purchased your car. This is when the sheer importance of purchasing gap insurance as an addition to your existing auto insurance policy becomes clear as crystal!
Let's now take a look as some of the most pressing questions about gap insurance:
Should I Buy Gap Insurance Even If My Car is Old?
You have probably heard from a friend or read on the internet that gap insurance is only for someone who has a brand new car. While it's true that the value of a new car depreciates very quickly and that's why this auto insurance add-on can be beneficial for the owner, you can choose to buy it even if you own an old or a used car.
Are There Different Types of Gap Insurance?
There are actually a wide variety of gap insurance coverages. However, only 3 of them are regarded as the most common of the bunch. They are: vehicle replacement gap insurance, back to invoice car insurance and contract hire gap insurance. Each one has its pros and cons, so it's a good idea for you to talk with the experts.
Where Can I Get My Hands on This Kind of Insurance Coverage?
If truth be told, it's less likely for you to be able to purchase gap insurance from your auto insurance company, but it's a case-to-case basis. More often than not, it is your trusted car dealership that will offer you this type of insurance coverage. It's also something that may be offered to you by a finance company or an independent insurance agent.
Does Gap Insurance Cover Deductible?
No, it won't take care of your deductible - you will still need to pay your deductible even in the event of a vehicular accident that's covered by your auto insurance policy. For instance, your total reimbursement amount would be equivalent to $4,000 if your deductible is $1,000 and your gap reimbursement total is $5,000.
Potential Rate Discounts
If you qualify for discounts, you may save the amounts shown below.
|5-yr Accident Free||$81|
|5-yr Claim Free||$86|
|Paid in Full/EFT||$47|
Compare Rates and Save
Find companies with the cheapest rates in your area
Discounts are estimated and may not be available from every company or in every state.