To find out if you have gap insurance, check the terms of your lease or loan, your current auto insurance policy, or both. It’s a good idea to find out whether you already have gap insurance before you purchase more coverage because this sort of coverage is typically provided as optional coverage by insurers or as an extra add-on by dealers.
It’s important to understand what GAP insurance is before you get started since it fills in the “gap” between your debt and the car’s value at the time of the accident. Your auto insurance provider would pay you $27,000 if you borrowed $30,000 for your new Toyota but it was only worth $27,000 at the time of the accident.
Fortunately, there is a wealth of knowledge available to soothe your concerns.
Continue reading to find out if you are protected and to discover all there is to know about gap insurance.
Do You Know if You Have Gap Insurance?
I’m sure you had to go through a lot of paperwork when you first acquired your car. There were probably many figures on the printout you were given at the dealership, but you were most likely interested in the ones that indicated how much you would need to pay for the automobile on a monthly basis.
It’s true that you won’t be certain whether you have gap insurance without discussing it in detail at the dealership. Contacting the dealer or your insurer is currently the only way to be certain. They will have a record of this information.
Drivers in Toms River have the option to purchase gap insurance since it is not a mandatory policy. As a result, you’ll typically be able to tell if you have gap insurance just by recalling purchasing it.
If you chose to lease your current car rather than finance it, you might not be aware that you have gap insurance. It’s possible that your lease agreement required you to purchase gap insurance to guard against a total loss, but drivers frequently overlook this requirement.
What Is Gap Insurance for Cars?
Here is a brief description of how gap insurance functions.
Imagine you spent $35,000 on a car. When the car is totaled in an incident that is covered by insurance, you still owe $30,000. You will be compensated by your collision insurance up to the depreciated worth of the totaled vehicle. Say the amount is $28,000. Without gap insurance, you would be required to pay $2,000 out of pocket.
However, the insurance provider will pay $2,000 if you have gap insurance.
If you’re wondering whether gap insurance is worthwhile, keep in mind a well-known fact regarding auto valuation: as soon as you drive a car off the forecourt, it starts to lose value. Therefore, even if you have an accident during the first week of owning the automobile, the difference between the loan’s principal and the car’s present value will undoubtedly be sizable.
Gap Insurance: When Does It Not Pay Out?
If you’re leasing or financing your car, gap insurance may come in handy. Typically, you can receive a payout six weeks after filing a claim.
There is a list of circumstances, nevertheless, in which it might not pay out; they depend on the provider among other things.
No payment will be made to you:
- if the claim is denied by your primary insurance. A failed sobriety test or irresponsible driving could be to blame for that.
- If the car is used for business reasons, such as a driving school or for hire,
- If you no longer make premium payments
- If you have already filed a claim with the same gap insurance
- in the absence of a “gap” to fill. A settlement from your auto insurance won’t affect your coverage if there is no difference between it and the price you originally paid.
- Remember that the explanations can vary from insurer to insurer. The terms of GEICO gap insurance and Progressive gap insurance, for instance, will differ.
- It’s possible that you are already aware of the exclusion factors if you obtained the loan on your own. You could also get in touch with the vendor.
Please be aware that although “full coverage” may sound like it would include everything, gap insurance nonetheless fulfills the same function. Therefore, you must purchase gap protection individually if you want to have it.
Purchasing Gap Insurance
The good news is that it’s still possible to buy gap insurance if it turns out you didn’t get it when you bought the car. Depending on your car’s model year, gap insurance might still be available to you. Due to the potential financial ruin that a catastrophic accident without gap insurance can inflict, you should probably give this some thought.
Asking your auto insurance provider if they can add gap insurance to your current policy is the quickest and likely least expensive option. Online price comparison is a great way to ensure you’re receiving the greatest value.
Another choice is to get gap insurance coverage from the automobile dealer. However, the cost will undoubtedly exceed what a large insurer will charge.
DO YOU HAVE GAP INSURANCE?
The state does not mandate GAP insurance, in contrast to liability insurance. Most of the time, if you’re interested in GAP insurance, you have to actively look for it or request that it be included in your auto insurance policy. There is one exception, though: if you lease a car, your lease contract can stipulate that you need GAP insurance in the event of a total loss.
REFER TO YOUR LEASE AGREEMENT FOR GAP WAIVER PROVISION
Don’t assume GAP insurance is necessary if you’re financing or leasing a car. Some automobile loan and leasing businesses, but not all of them, include a GAP Waiver Provision in the contracts they have with borrowers and lessees. Not sure if you have the GAP provision or coverage? Get in touch with your leasing or lender!
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