What is auto GAP insurance and how does it work?
Find answers to your legal question.
What is auto GAP insurance and how does it work?
 
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Just bought a new car? What if an accident occurred soon after taking your brand new ride off the lot? You have full coverage insurance, right? So, you're covered....maybe not.
When you drive your new car off the lot the value of your vehicle plummets, sometimes as much as 20-30%. Take for instance you pay $25,000 for you new vehicle and have an accident a month later. You probably have only made at the most one payment and if you did not put any money down your loan amount is still close to the $25,000 purchase price. Unfortunately, even with full coverage, which includes comprehensive and collision, you will only receive the market value of your vehicle which could be as much as 20-30% lower than the purchase price.
Fortunately, you may already have Gap insurance with your current insurer, which would insure you for the difference between your loan amount on the car and the actual market value of the car. If not you may want to compare prices online before purchasing a policy. Get a quote here: http://www.insureme.com/landing.aspx?Refby=614498&Type=auto It is important to look at many different companies before coming to a buying decision.
Take care,
Ron @ InsureMe |
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John H
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Gap insurance is the difference in the amount your car is worth vs. the amount owed. Since your cars value goes down as soon as you drive it off the lot there is a need for gap insurance. For example you buy a car 21,000 you total the car in 1 year you now owe 19,000 but the car is only worth 15,000 gap would pay the 4,000 to keep you from having a balance on the car you can no longer drive. |
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Kris
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As soon as you leave the car dealership after purchasing a vehicle, your car depreciates in value. If you were to get into an accident, hte insurance would pay the value of the car, depening on condition,mileage etc. Gap insurance would cover the difference between what the insurance company pays, and what you owe. I learned that the hard way! |
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John A
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In the event your vehicle is stolen, your insurance carrier will payoff the value of your vehicle and if you do not have gap insurance you are responsible for the balance of the auto loan, but if you have gap insurance then the gap insurance will pay off the remainder of the auto loan. |
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Sufi
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It means that if you total the car while you are "upside down" (owe more on it that it is worth) then gap will make up the difference. B'cuz the insurance company will only pay the actual value of a totaled car. Which might not pay off the loan, then you are stuck with paying the rest of the cost for a car that is gone.
If you are going to spend a lot of time upside-down in a car and you think there's a good chance it will be totaled, then i recommend it. If the person is a great driver and you can make the payments so you're not upside down then it's a waste of money. |
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oklatom
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Insurance that protects the lender. |
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PeppermintandPopcorn
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Let's say you get into an accident. The insurance company will pay the Actual cash value for the car, but what is what you own to the bank is more than that?
Gap coverage would provide you with the additional payments. |
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mzmscheeveeuhs
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Say what you actually owe on the car is $20,000 on the car but the blue book value is $14,000 - your insurance will pay the blue book value of the car that has been totaled then GAP will pay the difference. |
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colglennlarson
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GAP insurance pays the difference between the amount you owe on your car and what your car is worth, For instance, if your car gets totaled and you still owe $15,000 but your car is only worth $10,000 (before the accident), the GAP insurance will make up the $5,000 difference. Without GAP, you would still be responsible for the difference in the amount owed and the actual value of the car. |
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dairylandeducator
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It is for when you own more than a car is worth. For example you buy a 15,000 car with no down payment. You total it one month later, according to the insurance company it is only worth 11,000 (because of depraciation) so now you have no car and still owe the bank 4,000. GAP insurance will pay that 4,000 for you. |
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