Is Gap Insurance Right for Me?
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UPDATED: May 25, 2021
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Insurance in general is one of those things you hate to pay for because you cannot see the value in it, until you need it. Ironically, you are hoping you will never have to use it. So it is no wonder drivers often wonder if they need any coverage aside from the basics. Drivers want to know “is gap insurance right for me?”
This type of car insurance is best suited for those who have a car loan or have leased a vehicle. If you fall into this category, then you need to know some more details about gap coverage for your insurance policy. A good majority of drivers on the road today really could benefit from this type of auto insurance policy but may not even know it exists.
Gap Insurance Candidates
Here is how gap auto insurance policy works for you:
- You buy or lease a vehicle without a large down payment.
- When you drive off the lot, the amount owed on the car versus the true value of the vehicle is off balance. In other words, the car is ‘upside down’, which means you owe more on the car than it is worth.
- If you should have an accident and the car is totaled or if the vehicle is stolen and not recovered, your standard coverage on the car steps in. The thing is when it comes to writing a check to cover the car, you will quickly come to find out the standard insurance is only going to cover the value of the car. The difference between the value and what you owe on the car still comes out of your pocket.
If you are in a situation where:
- You will be financing the new car for more than 60 months
- Have a down payment smaller than 20%
- Are bringing a trade-in that is upside down
- Are leasing a vehicle
- Put a great deal of mileage on your new financed or leased car
Then gap insurance coverage is probably right for you. There are other instances where you could need gap coverage so if you are leasing or financing a car, find out before it is too late. Don’t wait until you have had an accident or your vehicle is stolen to find out you should have had gap insurance.
The Truth about Cars
Every car depreciates in value the moment you drive it off the lot, which is why most financed or leased vehicles make these drivers good candidates for a gap policy for car insurance. Some cars depreciate even more because they are known to have a lower value based on brand, performance or other factors. You should always plan on checking on how much your car insurance and gap auto insurance policy will run before agreeing to finance or lease a new vehicle.
When it comes to covering your car in case of accidents and theft, keep in mind the value of gap insurance to help keep you protected. Get your quotes right away by doing nothing more than filling in your zip code.