Gap Insurance For Cars
Once a new car leaves the dealer, its value depreciates by 11% in the first couple of weeks. Over the course of a year, the value of your brand new car is going to fall by 20%, according to stats published by the Insurance Information Institute.
Once your vehicle starts losing value, there is going to be a gap in your auto insurance. A form of protection against this kind of loss is gained by buying gap insurance at the outset. Now, you might come across a crucial question here, and you may wonder, “Is gap insurance transferable?”
Check out this quick guide for some reference.
Table of Contents
What Exactly Does Gap Insurance Cover?
Gap insurance, or General Asset Protection insurance, is a form of insurance that will protect a car owner from losses that can come up if the insurance compensation is less than the total amount of money that is owed. This situation will arise when the amount that you owe on the car loan is somewhat larger than the current book value of the car. It will be easier to explain this with an example.
Consider Mr Smith, who has a car that he bought for $12,000 from the dealer and has it insured as well. He took a loan to buy the car, and that is why he owes $15,000 in payments. If his car is stolen or damaged in a faultless accident, then the insurance company is going to give him only $12,000 back. Mr Smith will not receive the extra $3000 he needs unless he buys some gap insurance.
Benefits of Having Gap Insurance
According to Expert Insurance Reviews or EIR, there are a lot of tangible benefits that should drive you to purchase gap insurance for your vehicle. Here are some of the key benefits you can enjoy.
1. Gap Insurance Covers A Large Financial Divide Between Insured Values
Did you know that most gap insurance policies cover new and used cars worth $100,000 and also protect losses upto $50,000? Paying such a huge amount is very difficult for middle-class Americans – which is why gap insurance will protect you in this situation. If the downpayment of your car is less than 20% of its value, then it is a good idea to purchase proper gap insurance.
2. Gap Insurance Can Be Paid For In Versatile Ways
One of the key benefits of gap insurance is that it is inexpensive and it can be paid off in a lot of economic ways. You can pool together gap insurance with your regular auto insurance or you can pay it separately. Depending on the dealer, state and your driving record, a gap policy will cost you around $200-700 in total. It is an inexpensive policy with pretty big coverage.
Consider the Worst Case Scenario
The role of gap insurance is to protect your finances in the event of the worst case scenario. In the world of insurance, it is a well-known adage that “the worst does happen, and it is better to have insurance”.
If you are buying a new car, consider getting gap insurance so that your finances are well protected in the event of catastrophe. Just in case you are wondering where to buy gap insurance, remember that browsing through the trusted options is a smart move.
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