Gap insurance is an important form of coverage, particularly in the first few years after purchasing a vehicle with a low down payment or leasing. If your vehicle is stolen or deemed a total loss in an incident, gap insurance will pay you the difference between the determined market value of your vehicle and the outstanding balance on your loan or lease. This can be a considerable sum of money. In the absence of gap coverage, you could be responsible for thousands of dollars to make up the difference to your lien holder.
How It Protects You
It is a fact that a new vehicle can lose several thousand dollars in value as soon as it driven off the dealer lot. If, for example, you were to go out and get a loan for a new vehicle and just a few months into ownership you were involved in a collision that rendered it a total loss, the insurance company would pay you only the determined market value for the vehicle. The amount they pay you may be thousands less than the amount you still owe on the vehicle. In this instance, your gap insurance would step in and fill this difference.
What It Covers
Gap insurance will cover vehicle losses caused by accident, theft, flood, fire, vandalism, tornado, or hurricanes. After a few years of coverage, as the remaining loan balance falls below the market value for your vehicle, you can drop your gap coverage as it is no longer needed. Be sure to read your policy carefully to determine any exclusions or limitations on gap coverage. Get your best rate on gap insurance and get a free no obligation quote now by entering your zip code above.