Gap Car Insurance: Do You Need It?
What is gap car insurance and how do you know whether you really need it? Gap car insurance, like many other types of insurance isn’t necessarily required. That is to say that you can certainly purchase a new car without gap car insurance; however, you could be leaving yourself open for some losses if you don’t purchase it. Read on for more tips to better understand whether you need gap car insurance or you can skip it. Gap car insurance covers the difference between the market value of your car and your loan amount. Aren’t the two the same, you might ask. Not necessarily. You see, the moment you drive your car off the lot it depreciates, or loses value, immediately and quite significantly. Let’s say you purchase a new car and pay $25,000 for it. On average a car will depreciate at least 20 right after it leaves the dealership. That means your brand new car is now worth only $20,000. What happens if you have an accident soon after the purchase? Even if you have full insurance coverage, including comprehensive and collision, your insurance policy will still only cover the market value of the car. Unfortunately, even though the market value and insurance policy are now worth only $20,000 you still owe in the neighborhood of $25,000 for the car. Without gap car insurance you’ll be stuck covering that additional $5,000 on your own. Be aware that not all gap car insurance policies are the same and this is important. For example, some gap car insurance policies will cover losses due to theft and accidents but not all so be sure to ask questions regarding specifically what is covered in the policy before you take it. Usually, gap car insurance is a good idea if you are about to purchase a new car and are concerned that you wouldn’t be able to cover the difference between the market value and the amount that would be cover by the C
Tell others about
this page:
Comments? Questions? Email Here