What Is Gap Insurance On A Car
What Is Gap Insurance On A Car?
Gap insurance is a type of auto insurance coverage that helps protect you financially if your car is totaled or stolen. This type of coverage is designed to “fill the gap” between the amount you owe on a car loan and the cash value of the car. If your car is totaled or stolen, you may be stuck making payments on a loan balance that is more than the car’s actual worth. In this situation, gap insurance can help cover the remaining balance.
How Does Gap Insurance Work?
Gap insurance can protect you from being stuck with a loan balance that is higher than the cash value of your car. If you are financing a car, gap insurance will pay the difference between the actual cash value of the car and the amount you owe on the loan. That way, if your car is totaled or stolen, you won’t be left with a higher loan balance than what the car is worth. This can help protect you from having to make payments on a car that you no longer have.
Do I Need Gap Insurance?
Whether you need gap insurance depends on your individual circumstances. If you are financing a car, you should consider gap insurance if you have a loan balance that is higher than the car’s actual worth. This could happen if you’ve made a large down payment, or if you’ve recently purchased a new car and the value has depreciated. Gap insurance can help protect you from being stuck with a loan balance that is higher than what the car is worth.
What Does Gap Insurance Cover?
Gap insurance typically covers your loan balance in the event of a total loss or theft of your car. It can also cover the costs of a replacement vehicle, up to a certain amount. Gap insurance can also cover other costs, depending on the policy. For example, some policies may cover the costs of towing, storage, and car rental while your car is being repaired.
How Much Does Gap Insurance Cost?
The cost of gap insurance varies depending on the coverage you choose and the company you buy it from. Typically, gap insurance costs between $20 and $30 per month. But if you finance your car through a dealership, you may be able to add gap insurance to your loan for a minimal fee. If you buy gap insurance from an auto insurance company, you can usually add it to your existing policy for an additional premium amount.
Bottom Line
Gap insurance can help protect you from being stuck with a loan balance that is higher than what your car is worth. If you are financing a car, you should consider gap insurance if you have a loan balance that is higher than the car’s actual worth. Gap insurance typically costs between $20 and $30 per month, and you can usually add it to your existing auto insurance policy.
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