GAP Insurance is the difference of the actual cash value of a vehicle that you approve of buying and you want to be updated on what is a good quality of the vehicle that you want to own. GAP insurance covers the small cars or trucks that you want to avail. GAP Insurance is a big help to those who want their vehicle to be rented or to be used on a useful purpose or even in a business that involves delivery. GAP Insurance covers the drivers and helps them between the amount they owe on their cars and the cars actual value in the event of an accidental accident. This also helps them to pay the property that they have responsibly damaged.
How GAP works?
Gap insurance will be an addition to your comprehensive or collision coverage when your car is being stolen or totaled. There is also a gap plan that covers the deductible of the insurance. It can be an amount to be subtracted from the collision or comprehensive coverage.
Who are the Gap insurance providers?
Here are the main providers for gap insurance.
- Auto insurer – you can get gap insurance from your auto insurer, which is part of your regular insurance payment.
- The Dealer or Lender – as a one-time fee which can be turned into your loan payment.
- Company – a company that sells gap insurance only as a one-time fee.
How much is the cost of a Gap Insurance?
Typically it is around $20 per year, as preferred by the auto insurers however you need to get or buy the comprehensive and collision coverage. Some lenders charge a flat fee of $500 up to $700 for the gap insurance for non-profit consumers. But if you finance the vehicle through a credit union, then the gap coverage may be lesser.
There is also a standalone gap insurance that you can purchase online; it cost $200 to $300 for one time. Not all insurance company offers gap insurance; adding gap coverage is a good idea.
Is it worth it to get Gap insurance?
Gap insurance can be worth it in terms of:
- If you make a small amount of down payment.
- If you agree to have a loan in a term longer to 48 months.
- If you drive a lot that reduces the value of the car
- If you lease your vehicle
- If you bought a vehicle that devalues faster than the average.
Gap insurance is not required to have; however, there is an insurance company that includes this type of coverage automatically. If you are buying a new car, make sure to read its policy and coverages. You can always deny a gap insurance but think carefully if you don’t need it or vice versa.
If you have enough cash to cover the gap for your insurance to pay for the value of your car, then, you may don’t need to include gap insurance for your vehicle. To ensure that you will not have to pay for the gap is to talk to your financing department.