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What is Gap Insurance and How Does it Work?

You know that there are different types of car insurance policies that are available. It will be a bit complicated to make a choice especially when you do not know what you are looking for. One of the things that you may have heard about is gap insurance. But how much do you know about it and, more importantly, how does it work?

Well … now is your chance to find out.

What is Gap Insurance?

When you purchase a car, the value of the car will already become lower the moment that you take it out of the car lot, it will already depreciate in value. If you would use your car often, it would lose more of its value within a year. Suddenly, the car that you have saved up for and prized too much does not have the right value anymore.

If in case you get into an accident and the car becomes totaled or even badly damaged, you need the right car insurance that will provide the current value of your car. You cannot expect that the car’s amount will be the same as when you purchased it brand new. What matters is that you will have the right car insurance that will provide you your car’s worth during the early years of having your vehicle. If you want to know more about this, you can find more details at https://www.cheapautoinsurance.com/ .

When Do You Need Gap Insurance?

Not everyone will benefit from getting this type of insurance but you may need it if you encounter the situations that will be mentioned below:

  • You have made less than the normal 20% downpayment that is required for new vehicles.
  • The car that you have purchased would need to be financed for more than 60 months.
  • The vehicle has already been leased.
  • The vehicle that you have purchased has a depreciation value that is usually faster than the average car. This might be because of the brand that you have purchased.

If in case you are experiencing any of the situations that are mentioned above, you need to get gap insurance very soon.

Where You Can Get Gap Insurance

You know that you want to get the right car insurance that will be best for your current situation. Gap insurance may be the one that you need. How will you get this? There are different car insurance companies that will offer this to you. You can also get this from the dealer but dealers usually charge more as compared to car insurance companies.

Is Gap Insurance Optional?

This is one of the policies that you may decide to add to your own car insurance policy. If in case you feel that this will be ideal for you, then push through with it. Most car insurance companies will not increase your premiums too high for this. There are even some that will only increase your premium about $20. This may be worth it in the near future especially if you are still a new driver and you are not sure yet about how good your driving skills are.

What Does Gap Insurance Cover?

How will you know if gap insurance is worth it? You will know based on the things that it will cover if you choose to have a policy that has this. This is considered to be versatile insurance that will cover all of the damages that your car may encounter. This will not give coverage to the injuries that you may sustain if you get into an accident though. You need to understand this clearly to help you decide if this would be worth it.

  • Theft is covered by this type of car insurance especially if your vehicle is unrecovered.
  • This does not cover the costs of your deductible which means that you need to pay for this separately.
  • This will not cover medical or funeral expenses. As long as it is not related to the car itself, you cannot expect that this type of car insurance will provide the coverage that you want.
  • It can cover negative equity if in case you have not paid for the auto loan that you have taken in order to purchase your vehicle and you have already damaged the vehicle.

It is obvious that gap insurance is one of those things that you can consider as an insurance add-on. It will be ideal to use on its own without the basic car insurance policies such as liability and comprehensive insurance.

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