How Does CarMax Gap Insurance Work?

What is Gap Insurance?

Gap insurance is an insurance policy that covers the difference between what you owe on your car loan or lease and the car’s current market value. In other words, gap insurance is a policy that pays out the difference between what you owe on your car and its current market value if it’s totaled or stolen. It’s also known as “total loss coverage” or “guaranteed asset protection.”

Gap insurance is important if you’re leasing or financing a car. It’s also important if you’re buying a new car that depreciates quickly. In those cases, your insurance company may only pay out the current market value of your car, which may be less than what you owe on the loan. That’s where gap insurance comes in.

How Does CarMax Gap Insurance Work?

CarMax offers gap insurance as an optional add-on when you purchase a car from one of its dealerships. The cost of gap insurance for a CarMax car varies depending on the type of car and your state, but it typically costs between $500 and $1,000.

When you purchase gap insurance from CarMax, you’re essentially purchasing a policy from an outside insurer that covers the gap between the loan balance and the current market value of your car. The policy also covers any applicable sales tax, registration fees, and other costs associated with the purchase.

If your car is totaled or stolen, CarMax’s gap insurance policy will pay out the difference between the loan balance and the current market value of your car. This payment can be used to pay off the remaining loan balance, or it can be used to purchase a replacement car.

What Does CarMax Gap Insurance Cover?

CarMax gap insurance covers the difference between the loan balance and the current market value of your car if it’s totaled or stolen. It also covers any applicable sales tax, registration fees, and other costs associated with the purchase. It does not cover any mechanical or electrical repairs or damages, however.

CarMax gap insurance also covers any pre-existing damage to the car that may have occurred before you purchased the policy. This is known as “prior damage coverage.” This coverage is important if you purchase a used car that has been damaged in an accident.

What Are the Benefits of CarMax Gap Insurance?

The main benefit of CarMax gap insurance is that it can help protect you from financial hardship if your car is totaled or stolen. If you owe more on your loan than the current market value of your car, you could be stuck with a large bill for the remaining balance. With gap insurance, you’ll receive a payment that covers the difference between the loan balance and the current market value.

There are also other benefits to CarMax gap insurance. It covers pre-existing damage, which can be helpful if you purchase a used car that has been in an accident. It also covers any applicable sales tax, registration fees, and other costs associated with the purchase.

Do I Need CarMax Gap Insurance?

Whether or not you need CarMax gap insurance depends on your individual circumstances. If you’re leasing or financing a car, gap insurance can be a good safety net in case your car is totaled or stolen. It can also be helpful if you purchase a new car that depreciates quickly, or if you purchase a used car that has been in an accident.

Before you purchase a gap insurance policy, however, it’s important to make sure you understand the terms and conditions of the policy. You should also compare gap insurance policies from different insurers to make sure you’re getting the best deal.