Can You Get Gap Insurance On Used Car

What is Gap Insurance?

Gap insurance, also known as guaranteed asset protection, is a type of auto insurance policy that helps cover the difference between what you owe on your car and its current market value in the event of a total loss. If your car is totaled or stolen, gap insurance could help you avoid being liable for any outstanding loan or lease balance. In other words, it helps to bridge the gap between the amount of money you still owe on a vehicle and the depreciated value of the car.

Do I Need Gap Insurance On a Used Car?

Gap insurance is designed for newer cars, since the difference between what you owe and the value of the vehicle is usually greater on newer cars. That said, it is still possible to purchase gap insurance on a used car if the remaining loan balance is greater than the current market value of the car. In this case, gap insurance could be a smart purchase.

How Does Gap Insurance Work?

Gap insurance works in the event of a total loss. It's important to note that gap insurance only covers the difference between the actual cash value (ACV) of the car and the remaining loan balance. Therefore, if the ACV of the car is greater than the loan balance, gap insurance will not be triggered. The ACV of the car is determined by an independent appraiser or your insurance company.

What Are the Benefits of Gap Insurance?

The primary benefit of gap insurance is that it can help protect you from financial loss in the event of a total loss. If you still owe money on your car and it is totaled or stolen, gap insurance could help you avoid being liable for any remaining loan balance. Gap insurance can also help protect you from depreciation, which is the decrease in value of a vehicle due to age and wear and tear.

Where Can I Get Gap Insurance?

Gap insurance is typically offered through your car insurance company or dealership. However, you may be able to purchase gap insurance through a third-party provider. It's important to compare quotes from different providers to find the best coverage at the best price. Additionally, it's wise to read the fine print of any gap insurance policy to ensure you understand the coverage and any exclusions.

Conclusion

Gap insurance is a type of auto insurance policy that helps cover the difference between what you owe on your car and its current market value in the event of a total loss. While gap insurance is typically designed for newer cars, it is still possible to purchase gap insurance on a used car if the remaining loan balance is greater than the current market value of the car. The primary benefit of gap insurance is that it can help protect you from financial loss in the event of a total loss. Gap insurance is typically offered through your car insurance company or dealership, but you may be able to purchase gap insurance through a third-party provider.