AUTO INSURANCE ARTICLE
Gap Auto Insurance —Ideal Car Insurance for Stolen and Totaled Vehicle
By: james_writerWhen you get in a serious vehicular accident or your car gets stolen, you are responsible for the repair or replacement of the car. Gap Insurance can help you when this situation happens that can also save hundreds of dollars on your car insurance.
When you first drive your new purchased vehicle, its value is automatically depreciated and considered it as used. When you buy gap insurance, the policy covers the car’s actual value and not the actual amount you owned from the bank to purchase the car. Gap insurance breaks the gap as what your car insurance would assist you if the vehicle is totaled or stolen which pays off the balance if you owned a loaned or leased vehicle.
Here is one of a good example to describe this type of insurance: Let say, you purchase a new car amounting 25,000 dollars and have it financed by the bank for 12 months. Then two months later, your car unexpectedly stolen, the auto insurance adjuster would make a ‘wild guess’ to determine the value of your car in accordance to its depreciated value. Let say, the adjuster determines that your vehicle is now 20,000 dollar worth which lost 20% from the time you purchase the car. The bank where you lend the money to purchase the car tells you that you have to pay off 27,000 dollars including its tax, license fees, title and others. What will you do if the insurance company will only pay 20,000 dollars? Your gap insurance will pay for the remaining 7,000 dollars that helps you not to pay out of your pocket.
Here are the basic reasons why you should purchase Gap Auto Insurance:
Leased Vehicle – Most of the time when you lease a car, the leasing or finance company requires you to purchase gap insurance. The main reason is when you exceed the mileage under its contract the vehicle may have a lower depreciated value at end of the term. Remember that many insurance companies allow you to purchase gap insurance at any time during its term.
New Vehicle – If you pay for about 20% or higher as a down payment, you may not need gap insurance. However, if you will sign a 0% finance deal, your car depreciates its value automatically. Therefore, you will never get the value amount of the car when totaled or stolen.
Used Vehicle – It does not make any sense if you pay more on gap insurance for used car. However, many insurance companies still encourage you to buy the coverage if the used vehicle is less than two years old.
Remember that most insurance providers may require you to buy collision and comprehensive coverage for gap insurance. They also encourage every consumer who owned a leased or loaned vehicle to continue making their payments until gap insurance pays the benefits.
You can shop for gap insurance from various auto insurance providers. Just simply contact your own insurer or search on the internet for companies that offer this type of auto insurance coverage.