If you have a financed car, you may have GAP insurance and not even realize it. In most cases, you will be required to have GAP coverage for a financed car yet know nothing about it. If you are trying to make sure you have all of the coverage you need for your vehicle, you may also want to research GAP insurance policies. After all, if you are going to pay for it, you should know a little about it. Also, you should make sure you get the best rates possible for your gap car insurance coverage.
- What is GAP auto insurance?
Gap actually stands for Guaranteed Auto Protection, although many drivers think it stands for the gap in coverage this type of policy fills.
- Why is it important for financed cars?
GAP insurance basically covers the difference between the car’s true value and the amount you owe on it. When you buy a new car you are usually “in the red,” which means the amount you got the loan for is greater than what the value actually is. If you were to wreck the car or if the car were stolen and not recovered, the insurance would have to pay for the car. However, the insurance would only pay the value of the car. The difference between the value and what you owe would be your financial responsibility. Most of the time this would leave you paying thousands of dollars from your pocket for a car you no longer have.
- There are other reasons you may need GAP insurance.
This happens is if you bring a trade in that you still owe on, for instance. Also sometimes you only need GAP coverage in the beginning of the life of the loan when the amount owed is much greater than the value of the car. If, however, you are going to drive the car a great deal, the opposite may be true. As you drive the car more and more, the value depreciates and then you owe more on it than the car is worth.
What You Need to Know
If you are not sure if you have or need GAP insurance, this is something you should check with in relation to your car. The bottom line is that if you have a car that is financed, you may want to check on having GAP insurance. You may even already have this included in your coverage, but had better be certain or else you could be left covering a large gap, should something happen to your financed car.
The best way to find out how you can afford GAP car insurance coverage is to compare rates on policies. Even if you already have an auto insurance policy in place, be sure to get quotes from companies to compare rates to make sure you are getting the best deal possible on your premiums. Don’t make the mistake of assuming the rates you have presently are the best you could have.