What is Gap Insurance?

Shield yourself from financial loss if you own a depreciated car.

What's Gap Insurance? 

Gap insurance is a type of automobile insurance that covers the difference between the amount you owe on your car and its current market value. Gap insurance is designed to protect drivers in the event their car is totaled or stolen, and they still owe money on their loan. Many lenders require gap insurance for cars that are financed. 

Gap insurance can also be purchased as a stand-alone policy. The cost of gap insurance varies depending on the make and model of your car, your state's regulations, and the company you buy from. 

Some people choose not to buy gap insurance because they feel like they're overpaying for something they may never use. Others see it as an essential safety net in case of an unexpected disaster. 

The Benefits of Gap Insurance 

When you buy a car, the cost of the car is not the only expense you have to worry about. There are also monthly payments, insurance, and gas. If something happens to your car and it is not fully covered by your insurance policy, you will have to pay for the repairs yourself. This is where gap insurance comes in. Gap insurance covers the difference between what your insurance policy pays and the amount still owed on your car loan. This can be a huge savings if your car is totalled or stolen. 

Gap insurance is designed to protect drivers in the event that their car is damaged and the cost of repairs exceeds the value of their car. gap insurance will cover the difference between the car's value and the cost of the repairs, up to a certain limit. This can be helpful for drivers who are not able to afford to pay for repairs out-of-pocket. Gap insurance can also help drivers avoid having to purchase a new car if their current one is no longer drivable.

How Gap Insurance Works

When you buy a new car or van, it loses value the minute it leaves the showroom floor. In general, a car loses as much as 20 percent of its value during the first year of ownership. Optional collision insurance will reimburse you for any depreciated value of your vehicle, generally speaking.

The precise amount of your car-loan may vary depending on the value of the automobile, which may differ from the balance of the loan.

insurance coverage if you have ruined or gotten rid of your automobile, gap coverage a deal in between what's owed on an automobile and the amount the insurance coverage pays out.

If you need to specialize in gap insurance, do so.

Gap insurance coverage is a good consideration for new car buyers:

• A down payment of less than 20 percent was made.
• Borrowed for 60 months or longer.
• The vehicle was rented (carrying gap insurance is typically required when leasing a borrowed vehicle).
• The old negative equity was rolled over into the new loan.

Where to get gap insurance?

Your car dealer may offer you to fill in the gap insurance coverage on your new automobile. However, most car insurance businesses also provide it, and they frequently cost less compared to the dealer. Most insurance insurance policies include gap insurance policy along with collision and comprehensive safety. It adds only $20 to an annual premium.