Should You Buy Gap Insurance
Should You Buy Gap Insurance?
What is Gap Insurance?
Gap insurance is a type of coverage that helps close the gap between what you owe on a financed or leased vehicle and its actual cash value in the event of a total loss. This insurance is often offered by automotive lenders or car dealerships as an added protection to your existing auto insurance policy, but can also be purchased as a separate policy.
Do You Need Gap Insurance?
Gap insurance is a good option if you’ve borrowed a lot of money to purchase your car and wouldn’t be able to afford to pay off the remaining loan balance in the event of a total loss. It can also be helpful if you’re financing or leasing a new car that’s likely to depreciate quickly. The insurance will cover the difference between what you owe and what your car is worth in the event of a total loss, up to a predetermined amount.
Do You Already Have Gap Insurance?
If you have comprehensive and collision coverage on your vehicle, you may already have gap insurance. Check your policy to see if it’s included, or call your insurance agent to find out. If you have a loan or lease on your vehicle, your lender may also provide gap insurance.
How Much Does Gap Insurance Cost?
The cost of gap insurance varies depending on your vehicle type, the amount of coverage you need, and the insurance company you choose. Most policies are sold as an add-on to an existing auto insurance policy, so the cost will depend on the coverage you select. Generally, gap insurance costs between $20-$30 per year.
How To Buy Gap Insurance?
You can purchase gap insurance directly from your auto insurance company, or from the lender or dealership that’s financing or leasing your vehicle. Be sure to compare prices and coverage options to ensure you’re getting the best deal. If you’re purchasing from a dealership, you can usually add the cost of the gap insurance to the loan for the car. If you’re buying from an insurance company, the cost of the coverage is usually paid up front.
Bottom Line
Gap insurance is a good option for anyone who’s financing or leasing a new car and wants to protect themselves from the potential financial burden of a total loss. Before you purchase gap insurance, make sure you know what’s already covered by your existing auto insurance policy and compare costs and coverage options to ensure you’re getting the best deal. By taking the time to compare and shop around, you can ensure you’re getting the right coverage at the right price.
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