Today you get to drive your brand new car off the dealers lot. That new car smell, the feel of the steering wheel…The last thing on your mind is driving your new car into an accident…do you really need more insurance? What is Gap Insurance?
What is Gap Insurance?
As you drive off the dealers lot, you owe $25,000. You have worked hard for that money. You’ve earned it.
A few months pass. Out of no where you find yourself in an accident and total your brand new car.
Your insurance company writes you a check for $18,000. But you still owe the bank $22,000…
Gap insurance would pay the $4,000 shortcoming.
Gap Insurance covers you when you owe more on your vehicle than the car is worth.
Typically when you buy a new car (or lease) you can purchase Gap Insurance through one of the following:
- Your lender
- The dealership you purchased your vehicle from
- Your insurance agent
Read the fine print! Buying from a dealerships can be pricey.
Buying Gap Insurance from your agent isn’t a separate policy. Simply, it’s an endorsement to your current auto policy. But you have to ask your agent for the coverage.
You will be required to have Comprehensive and Collision coverage if you want Gap coverage.
There is no wrong place to purchase it from, but do your due diligence.
Is it worth it?
Find out what the value of your vehicle is. If your car is estimated to be worth more than you owe or you have a comfortable nest egg, then you may not need the extra coverage.
The main thing is to protect the gap between what you owe and what the vehicle is valued at.
The last thing you want is to be upside down. Protect yourself from the gap.
