Gap or “Guaranteed Auto Protection” is usually an optional purchase with your insurance carrier, which you may want to consider including with your policy.
Yet, drivers looking to purchase insurance may not be familiar with Gap at all.
So what exactly is Gap?
Gap Insurance covers you for the amount you owe on your car loan and your car’s estimated value.
This means that if your car is totaled in an accident or stolen, gap insurance will cover the difference between what you owe on your car and how much the car is worth.
In other words, it covers the space or “gap” between the auto value and the auto loan.
However, if you’re certain that you’ll never owe more than your car is worth, then you won’t need to buy it.
How do I know if I already have GAP?
Gap insurance is paid up front to account for any depreciation on the vehicle.
Some leasing companies already have gap coverage built into their leasing agreements; likewise, some insurance carriers also include it as part of their standard coverage.
So always check before you buy.
Otherwise, these policies vary in price from a one-time fee of about $100 or nominal fees of a few dollars or less per month.
What happens if you do not purchase GAP?
It’s not for everyone, and it may only be required by some finance companies.
However, if you do not have gap insurance and find that you are the victim of a car accident with a total vehicle loss, your collision and comprehensive insurance may not cover all of your costs.
This is because of depreciation; remember, an insurance company will only pay you for the actual cash value of your car at the time of the loss.
GAP: A First-Hand Account from a Paralegal’s Point of View.
“[Years past] I had a motor vehicle accident, and my car was totaled. As I had just purchased the vehicle only 6 weeks prior to my accident, I still owed a majority of the loan amount to the bank; and because of that, [I] would have been upside down had I not purchased GAP insurance…
In the case of someone who has a leased vehicle or may owe more on their vehicle loan than what their vehicle is worth [as I experienced], it may be a wise investment.”—Paralegal Diana Nicoletta at the Law Offices of James G. Graver, P.A.
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“I spent over a decade successfully defending large corporations and insurance companies – Now I work to serve YOU, the injured.”–James G. Graver, Esq., Founder