A car gap insurance, also known as Guaranteed asset protection, is a type of insurance that covers the difference between the outstanding loan balance or lease and the car’s actual value in the event of when a vehicle gets totaled during an accident or gets stolen. Gap insurance saves the car owner so much money if a car is lost in an accident. Systems such as NADA and the Kelley Blue Book Valuation system are the ones the insurance companies use to dictate whether a vehicle is a total loss or not. Some of the factors they consider when concluding include the model and make of the car, the mileage, and the vehicle’s state. All of this happens when one has made a filed claim, and in case the car owner is not happy with the results from the insurer, they can file a lawsuit to get a higher settlement. Some of the famous insurance companies that offer gap insurance include Liberty Mutual, Auto-Owners, Nationwide, Travelers, and more. Gap insurance differs for used and new cars; however, it is of more value to car owners with new vehicles than those with used cars. To learn more about gap insurance, one can read reviews from customer reviews and the insure gap reviews. Below are some of the details one should know about gap insurance:
1. Why do you need Gap Insurance?
Gap insurance is not a must-have for every car owner, though it is critical to ensure that you are financially stable in case your car gets into an accident. Some of the instances where you need gap insurance include: if you value your car with a higher depreciation rate since most cars depreciate at a slow pace. However, other cars do depreciate at a rapid rate. Also, you must purchase gap insurance in instances where you are leasing a car. Driving for long distances increase your mileage and thus makes a car depreciate more quickly than other cars doing short distances, thus enabling one to benefit from the insurance.
2. How to buy gap insurance.
The criteria for purchasing gap insurance for new and used cars are more likely the same as the place to buy the insurance. Purchases can happen from an agency or a dealership. However, it is advised that you should refrain from purchasing the insurance from the dealership where you bought the car if it’s new since they have rates that are more expensive than you can get from other agencies. To have the best experience when purchasing gap insurance, one should request an insurance quote from the insurance agent. The best time for buying gap insurance is after one has secured a car loan.
3. What does gap insurance cover and not cover?
Both used and new cars have the same experience regarding gap insurance. One of the questions asked is what is and is not covered by the gap insurance. Gap insurance does protect a car owner from loss or damages that may arise from theft and a car is totaled during an accident. On the contrary, if the vehicle is not destroyed, if, as a car owner, you have a deductible, or when you have experienced bodily injury or death, the gap insurance will not be responsible.
4. Where can you purchase gap insurance?
As much as it is essential to know why you need gap insurance, how to get the gap insurance, and what gap insurance covers and doesn’t cover, it is also necessary to know where the best places you can get the insurance. Some big and famous insurance companies include State Farm, Esurance, Travellers, and Nationwide. For most of these companies, for one to get the gap insurance either for a new car or a used car, they must have a collision and comprehensive coverage plus other conditions that a company may specify. However, car dealerships can offer the gap insurance without demanding the other two coverages, though with poor rates. Therefore, every car owner has a right to choose where to purchase their insurance.
5. Types and alternatives of gap insurance.
Having the above knowledge regarding gap insurance is not enough without knowing the types of gap insurance and even the alternatives to the gap insurance. There are five types of gap insurance that new and used cars can have that is Contract Hire GAP(CHG), Finance GAP, Negative Equity, Vehicle replacement (VR), Return to invoice cover (RTI), and Agreed Value Cover (AVC). The alternatives to gap insurance include New-car replacement insurance and Better-car replacement coverage.