Gap Insurance –

gap insurance
A type of insurance that is most often needed for owners of new cars or leased vehicles is gap insurance protection. This coverage will insure you against the difference of what is specifically owed on the vehicle and the current market value of the car. If you have an older car that is not worth much and is owned outright by you, then you probably do not need gap car insurance. However, if you have an auto loan on a vehicle that has depreciated more than the car is valued at, getting this coverage is smart. For example, in the event you are in an accident that totals the car or the car is stolen and unrecoverable, gap coverage will pay the difference.

What is Gap Insurance

The vast majority of drivers only need standard auto insurance that provides protection against auto accidents and vehicle thefts. However, if you own a new, nearly new or a leased vehicle, then you need to learn what is gap coverage and if it applies to your vehicle. To illustrate the point, lets say you buy a new Infiniti sports car for $33,000, loaded with all the options.

You were able to secure a loan for only 10% down. The bank then loans you $30,000 for the car and in return you promise to pay back that amount plus interest. After one year, the car is now worth just $23,000 but you still owe the bank $26,000. Now you can see there is a “GAP” in what the car is worth and what you still owe the bank.

Buying gap auto insurance in your case would be a good move because for just a few extra dollars a month, you can insure the vehicle for more than the present value. In the event your car was completely totaled in an accident or was stolen, you would have adequate protection to pay back the loan to the bank and not have to come up with the money out of your pocket. Get a free gap insurance quote now and find the best online rates in minutes.

Is Gap Insurance worth it

If you have a leased vehicle that is depreciating quickly, the leasing company may demand you get gap coverage. However, what if you buy a used car with a bank loan and are asking yourself, is gap policy worth it, or should I skip the coverage? First, do a little research online into the current value of your car and compare that to your outstanding bank loan. If your car is worth $1,000 less than your bank loan, it would be financially smart to get this coverage because the cost of gap car insurance is so cheap. If however, your car is worth almost the same as the bank loan, then you probably do not need to cover it with gap protection.

It is important to note that many dealerships that lease vehicles require you to get gap automobile insurance on site, if you do not already have it. Most dealerships will sell you gap auto insurance that is much more expensive than going with standard online insurers. Do your insurance homework prior to leasing a car and have your quote and policy ready to go in the event you do decide to lease a vehicle. If you want to save money, never get auto insurance from an auto dealer, because you will inevitably end up paying way too much.

You will most often need gap insurance for your car when:
1. You lease an automobile
2. Finance your car for 5 years or more
3. Drive a lot, thus depreciating the vehicle quicker
3. Put a small down payment down, often 20% or less
4. Transfer loans and apply negative equity towards a new car
5. Have a new car with a history of fast depreciation

If some or many of these conditions apply to you, then you should seriously think about adding gap policy coverage. Remember, you can add on gap coverage anytime to your existing policy.

Gap Auto Insurance costs

If you have a typical auto insurance policy that covers for collision damages or is fully comprehensive, adding gap to it will cost around 5% more. So lets say your current automobile insurance coverage annually is $1,200. Adding gap coverage will only be an extra $60 yearly. That is pretty cheap and should be affordable for almost anyone’s budget. If you want to think of the gap vehicle insurance cost monthly, then it’s only $5 a month or so for this enhanced protection.

Gap Insurance Quotes

Make sure you check with leading online providers to see who has the lowest gap quotes insurance. Do not just go with the first quote you get. Compare rates from at least 10 gap policies companies before you buy coverage. Rates can vary a lot between companies so do your due diligence and get the best rate available.