AUTO INSURANCE ARTICLE

Loan and Lease Car Essential: Gap Car Insurance

By: beverly

The moment you drive a new car, it will automatically depreciate its value and consider it as a used car. Normally, auto insurance covers the vehicle’s actual cash value and not the actual amount owed from the bank which you lend the money to buy the car. If the vehicle gets totaled due to collision, fire, theft and other severe situation you’re still accountable to replace it.

Gap insurance is considerably an ideal coverage as it will pay the actual cash value of the car as well as the outstanding balance amount on your lease or loan which is normally not covered on the traditional car insurance. This vehicle insurance coverage relatively protects the car lease or loan.

Here’s an example, if a car stole or totaled from car collision and the actual cash value maybe 14,000 dollars and the leasing or the amount you owe from the bank is 16,000 dollar, the insurance company will pay the actual cash value and the 2,000 dollar difference or gap will be covered by Gap auto insurance. "A lot of claims are surprise because they don’t think about it. Gap insurance is typically enough part of the standard coverage. Discuss it with your agent to find out if the insurance company offers this option.” as Jem Abassah from Allstate Insurance Company stated.

Gap insurance is an optional policy coverage and not included on your traditional automobile insurance contract though a must for those loan or leased car agreement. Generally, lease contract have need you to carry comprehensive and collision coverage as gap insurance will not acknowledge if you don’t have those two coverage. You should purchase it separately as many auto insurance companies provides this policy option. Auto dealership also offers gap insurance but most of the time on a high premium rate.

When buying gap insurance make sure that this is no longer part of your current auto insurance policies and not all insurance companies offers gap insurance so you need to discuss it with your insurance agent.

Insurance experts generally say anyone buying a new car, lease or loan cars must consider this essential auto insurance coverage.