Auto Insurance policies mean a lot for the individuals who loan their vehicles. If you think that in the event of an accident or theft your insurance will pay for the remainder of the loan, you are making a mistake. To avoid this mistake, Gap Insurance helps the driver. In the event your vehicle is declared a total loss because of a theft or accident, Gap Insurance will step in to cover the difference between the amount you own on a car loan and the value of the vehicle determined by the insurance company.
If you bought a car, you might not know that in the event of a total loss due to an accident or theft, the insurance company does not have to pay the total in full. How do you know if you need Gap Insurance? Here are some reasons why you should consider purchasing the coverage:
- You financed the car with little to no down payment – Before the amount of the loan and the value of the car start to balance, it might take several years of paying your loan.
- The car you bought does not have good resale value – For cars that lose value quickly, you will be at disadvantage unless you made a large down payment.
- You commute a lot – If you drive lots of miles, you reduce the value of the car pretty fast.
- The car loan you have taken out is longer than 60 months – With long-term loans, it takes a while before the car’s value and the loan balance start to equalize.
Gap Insurance coverage contracts usually require you to carry comprehensive and collision coverages. If you are not certain whether Gap or Lease Insurance is a suitable option for your needs, consult a licensed independent agent from Team Insurance to receive the expert advice on the matter.