What Is Gap Car Insurance?
If you have a car lease, you might wonder what can happen if it gets in an accident or becomes a subject of a theft. This car is not yours; however you are responsible for it. It means that after your insurance company covers the repairs, you still owe some money to the manufacturer or the finance company.
If this is the case then you need gap insurance. This is what you definitely must have if you have a car lease. Insurance company that provides you with gap car insurance covers the difference between the actual value of the car and what the manufacturer is demanding. To put it in simple words - this insurance will insure you for the difference between what you would owe on a car and what an insurance company states it is really worth now.
If something happens to your car, your insurance company pays off the actual cash value. It means if you bought a car worth $30,000 plus $2,000 of interest, tax and license fees and it got into an accident in a couple of months, your insurance company would say it is worth only $25,000. This sum is usually considerably less than car's actual retail value. It means that this $7,000 is a gap you would need to cover on your own, if you had no gap insurance at the moment. That is why you have to plan ahead.
Gap insurance is usually provided for the new vehicles being financed or leased. Even though most lending companies do not require gap insurance, this is something you might want to have. There is no need to pay so much more money in case of an accident. They might deliberately not want you to know about gap insurance to be able to get more money of you, but you have to be aware of all possibilities.
Besides, if you are thinking of initiating a car lease or loan, you should find out what is the best way for you to get gap insurance. On the one hand, you can purchase gap insurance right from the dealership. However, they usually offer this kind of insurance at an unreasonably high premium. That is why you should first check your current car insurance, because sometimes gap insurance can be already built into the premium. If it is not, you should check the quotes of other car insurance providers not to overpay at the dealership.
You can feel free to buy gap insurance not only when a lease is initiated, but also during its term. So, do not waste your time and money, go get yourself gap insurance! And here is one more tip: when you have gap insurance and your car get damaged beyond repair, you should follow all the instructions of your insurance company. Sometimes, they want you to keep on making monthly payments on your vehicle until the cost of the gap is covered. Not knowing the fact, you might get yourself into so late fees.