What You Need To Know About Car Insurance
GAP Auto Insurance Coverage
Maybe you just drove off a new car from the dealer’s shop or have been driving an old trusty auto for years; you still can’t deny the fact that you must protect yourself, others, and your n-wheeled investment with a reliable auto insurance. There are hundreds of car insurance companies that offer great deals. But what exactly are the things you need to know before buying one? To help you get on the right track, let me tell you about these two awesome car insurance coverages: the GAP auto insurance and loan/lease insurance coverage.
Guaranteed Auto Protection (GAP) Insurance
is the difference between your vehicle’s actual cash value and the balance still owed on the financing. It is mainly used on new and used small vehicles such as cars and trucks as well as heavy trucks. Dealers and auto insurance companies offer this during the time of purchase.
Investing on GAP insurance can potentially save you thousands of dollars as it pays the difference between what you owe on your car and what it’s worth at the time of the accident. This type of insurance is particularly important for those leasing a car.
Basically, GAP insurance ensures that your car is paid off after an accident or when it gets stolen and unrecovered. It may give you the chance to get a settlement that is not based on what you have paid for it but on the car’s actual cash value or ACV.
Some dealers add GAP insurance to their policies by default. But it is still important that you check your coverage paperwork to make sure if your car already has one. Lenders usually require their clients to add GAP insurance to their regular collision and comprehensive coverage as it adds a higher level of security to the car owner as well as the lender.
Lease/loan insurance coverage is another form of GAP insurance. While GAP insurance provides you with the security that the gap between your car’s actual cash value and what you still owe is paid off, lease/loan insurance coverage only pays for a percentage of your vehicle’s actual cash value. In most cases, it is rated at about only 25%.
Although both GAP insurance and lease/loan insurance add a couple of bucks to your monthly or biannual payment, it is essential that you add either one of these two to your regular car insurance policy.
Additionally, keep in mind that when the time comes that you owe less than what your car’s actual cash value is, you always have the option to remove this from your insurance policy. Most car insurance companies alert their clients when this time finally comes but some don’t. So it is better to keep track of it yourself.
These are just simple tips and reminders in purchasing a car insurance policy. To have a better understanding of what you need to know when planning on purchasing one, talk to your trusted car dealer and ask about their offers. Good luck!