So, you just purchased a new to your vehicle and you leave the lot. You enjoy this vehicle for three years. You find yourself turning down the street someone did not see a stop sign. Unfortunately, your vehicle is completely totaled. Will your insurance bail you out from your purchase? The sad answer to this question is typically they assist partially, not completely. This leaves you to pay off the remaining of the vehicle loan monthly on a vehicle you no longer have in possession.
This is a much more common issue than people would like to recognize. The insurance agents are only going to pay for what the current worth of the car before damage is. They do not take into consideration how much you owe on the loan. Therefore, if you owe more than the vehicle is worth you are forced to pay the difference.
This is where GAP insurance comes in to assist you. When you first purchase a vehicle, you have the option to purchase this and tack the associated cost onto your loan. The high-level picture of what this insurance does is covers you for the difference of what the vehicle is worth and what your remaining loan balance is. There are a few things that you might have to pay out of pocket such as normal wear and tear, but a couple of hundred dollars is much better than four or five thousand.
There are a few things that you will want to keep in mind. Make sure that you have full coverage including comprehensive as most GAP insurances will not pay out without them. If your vehicle is stolen then wrecked, ensure you follow your insurance company’s policies about continuing to pay the carry payment until the payment is submitted. For more information on GAP insurance, visit our friends over at Newark Dodge, Chrysler and Jeep.