Gap insurance, otherwise known as “guaranteed auto protection,” is insurance designed to cover the difference between a car’s actual cash value and the balance of the loan financed when the car was purchased. If your car is totaled, gap insurance provides you with full coverage in case you still owe a remaining loan amount. As the name implies, it fills the gap between what you owe and the car’s value. What are the benefits of GAP insurance you might ask? This form of protection is both beneficial and convenient, covering worst-case scenario, offering flexible payment options, and expediting the replacement process of your vehicle.
Protection When The Worst Happens
Purchasing a brand new car is usually a very happy day. However, as soon as you drive it off the lot, your new car is technically not brand new and immediately depreciates. Sometimes this depreciation can be as drastic as losing 20-30% of the total value.
This depreciation has no impact on your loan amount. It remains the same and needs to be paid off, no matter what circumstances the vehicle or driver may encounter. For example, if the vehicle is lost, stolen, or totaled (deemed unfit to drive), the remainder of the loan is still owed. This is where gap insurance comes in making up the difference between the car’s depreciated value and the remaining balance. Without gap insurance, that difference is now a burden the driver must bear. Combined with new payments for a replacement vehicle. You can clearly see how GAP insurance has the potential to save a driver thousands of dollars in lost money in the event of a disaster.
Because gap insurance is technically separate from your typical monthly car insurance, there is no obligation to pay for it the same way you pay for your coverage. You can decide to pay for the entirety of the gap coverage in one fell swoop or incorporate smaller payments into your monthly car insurance premium. Your available funds and cash flow will help you decide what works best for you.
There are also instances in which the purchase of gap insurance does not immediately have to be implemented when someone buys a vehicle. Some dealerships offer the coverage for twelve months after the initial purchase of the car, allowing you to have time to evaluate your need for the coverage. GAP insurance is also convenient because it is meant to last for the same amount of time as the car loan. When the loan is paid off, there is no need to pay for the extra coverage because there’s no longer a gap to cover.
There’s no escaping the stress caused by theft, an accident, or the complete totaling of what is most likely your only mode of transportation. You’ll have to deal with insurance claims, police reports, and still, make payments on the totaled vehicle. You may even be effected by health problems caused by the accident. With so many things to do, the last thing you want to worry about is purchasing another vehicle and handling the additional payments that come along with it. Buying a GAP insurance policy would ensure that you are not responsible for the balance of a loan on a financed vehicle.
If you are involved in a damaging accident, the technicians at Wrecktify want to help relieve your stress and fix your vehicle. Our location in New Glarus, Wisconsin allows access to residents of both Wisconsin and Chicagoland. Visit wrecktifycollision.com to make an appointment with our experts for a collision estimate and repair.