Do I Really Need Gap Insurance on a New Car
Gap insurance is a good way to add more protection to your auto insurance policy. But before we dive into whether gap insurance is right for you, it's important to have an understanding of gap insurance's definition. Gap insurance stands for Guaranteed Asset Protection insurance. It is an optional, add-on coverage that can help certain drivers cover the "gap" between the financed amount owed on their car and their car's actual cash value (ACV), in the event of a covered incident where their car is declared a total loss. For example, you are in an accident and are not found at fault – but your car is totaled. You still owe $13,000 on the auto loan at the time of the accident, but your car's ACV is only $10,000. Gap insurance would help cover the $3,000 difference (minus your deductible). Contrary to popular belief, gap insurance coverage does not mean that your insurance provider pays you the full amount you originally paid for your car. Having gap insurance means your insurance provider may pay the financed amount you currently owe on your car at the time of a covered accident, minus your deductible. Depending on your circumstances, gap insurance can be a smart addition to your collision insurance policy. If you're wondering if you need gap insurance, there are a few things you should consider. Gap insurance is a good option for the following types of drivers: Drivers who own their car outright and drivers who owe less on their car than its current actual cash value (as there is not a "gap" in value) do not need gap insurance, but will still need car insurance coverage to help keep them and their car protected from the unexpected. If you need gap coverage, you're likely wondering what the added cost of gap insurance will be to your auto insurance premium. While gap insurance isn't typically as expensive as broader coverages like comprehensive insurance or liability insurance, the cost varies depending on a variety of factors including: Keep in mind that once you "close the gap" by owing less on your car than its ACV, you will no longer need gap insurance. You may still be asking yourself – is gap insurance worth it? It certainly could be in the right circumstances. Gap insurance takes effect in the event of a complete loss of your vehicle, such as theft or a covered accident which renders your car a "total loss." And although you might be a cautious, responsible driver, not everyone else on the road is. Not having gap insurance if you are "upside down" on your car loan could mean you are reimbursed for thousands less in the event of a complete loss. Are you willing to take a gamble on the gap? Learn more about whether gap insurance is right for you and start a free quote today.Gap Insurance Definition
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Do I Really Need Gap Insurance on a New Car
Source: https://www.nationwide.com/lc/resources/auto-insurance/articles/is-gap-insurance-worth-it
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