Is Michigan Gap Insurance Worth It? And Other Common Questions
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UPDATED: Feb 2, 2012
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If you do not already have gap auto insurance coverage, this is a good time to find out what it is and if you need it. By reading some of the most commonly asked questions about gap car insurance policies you can begin to get a clearer view of what it is, how it works and if it would be right for you. Often times, drivers settle for any type of car insurance policy just to get that part of their lives organized.
The problem is they could end up leaving large gaps in their policy. You can now get quotes for different types of car insurance policies and find one that works for you. Not only that but you are more likely going to find a policy with even better coverage at the same or lower rates than you are paying now.
There is no clear, cut and dry answer for this question, but more than likely if you are considering gap auto insurance coverage you probably could use it. If you have a car that is financed and do not already have gap car insurance coverage, you could be taking a risky gamble that could lead to expensive consequences. Michigan gap insurance coverage is what insures the difference on the value of your car and the total loan amount you have remaining.
This is obviously of much greater importance in the beginning of the loan. So, if you are paying on a car loan and know you still owe more than the car is actually worth, then you should realize that gap car insurance is very worth having. If your car were to be stolen or damaged in a collision beyond the point of repair, your standard car insurance would pay some of the loan amount, but only for the car’s current value. Any difference between the two is your responsibility to pay from your own pocket.
What Does Gap Insurance Cover?
When a car is totaled out it means the damage caused by an accident has rendered the vehicle beyond the point of repair Or that fixing it would still end up costing more than the entire value of the car is worth. If you have just driven a brand new car off the lot and are financing it, you are probably well aware of the fact that the vehicle is valued at less than the loan amount. The earlier into a car loan you are with any financed vehicle the greater the odds that you owe more than the car is worth. In other words, you are “upside down” with the car.
You may also end up with a car loan exceeding the value of the car if your trade in for the new car was upside down. It is very common these days for drivers to bring in a car they are still paying on but want to get out of it. By adding the amount still owed on the original trade in vehicle to the financing amount for the new car, you are creating a loan amount that far surpasses the car’s value.
If you should total out a car that is “upside down” or if it should end up stolen, what the bank will receive as “full value” for the car to settle the outstanding loan amount is not going to satisfy the entire amount. Whatever the difference is between the car’s value and the amount of the loan is the amount you will be financially responsible for paying. This is the gap that gap insurance covers. This also helps in cases where you are leasing a vehicle but end up totaling it out or having it stolen.
How Much Michigan Does Gap Insurance Cost?
This can vary a great deal on a number of different factors of course. By getting gap insurance coverage quotes, you can end up with better rates because insurance policy providers are offering rates that are more competitive. Some factors that could influence the rates of your gap auto insurance coverage include:
- The value of the car and MSRP or Manufacturer’s Suggested Retail Price
- Your driving record including tickets and accidents
- Your insurance coverage history and hopefully no lapse in your coverage for 30 or more days
- The state you reside in even down to the zip code you call home
- Where you park your car in the evening – the protection of a garage or decreased theft possibility of being kept in a subdivision make rates drop lower
- How often you drive, how much you drive for work and whether or not you use the vehicle for transportation during work hours
The Bottom Line
The truth is there are plenty more questions drivers may have about gap insurance policies, but these are among the top most common and frequently asked. The best next step you can take is to start getting your gap auto insurance policy quotes gathered today. At one time, this would have been a tedious task because you would have had to collected all of the information yourself.
The process for getting Michigan gap insurance quotes used to start by writing down all the names of the insurance policy providers in your area and then either calling each one or going to the office in person. You would provide each company with your personal information repeatedly, then simply wait, and hope to hear back from each company.
For many carriers it meant having to call them back after a few days of waiting to get the prices. It is no wonder drivers would end up settling for the very first car insurance policy quote they got regardless of the price. However, those days are long gone and now all you need to do is provide just your zip code to get started. From there you will get access to companies competing for your business and offering the best Michigan gap insurance quotes around.