GAP INSURANCE
What is Gap insurance?
Gap insurance will insure one for the difference between what one would owe on a vehicle and what an insurance company says it's worth. This insurance is a must for someone who is considering purchasing a new vehicle since a new vehicle depreciates right after it is driven off the dealer's lot.
What does Gap insurance cover? Depending on the policy, Gap insurance usually covers accidents and thefts, but not all policies are the same so one will want to evaluate the coverages being offered before purchasing Gap insurance.
Can I buy Gap insurance for my older vehicle? Probably not. Although a small minority of insures may provide Gap insurance for any vehicle, it is usually only available for new cars being financed.
Is Gap insurance required? No.
Most lending companies who finance cars do require full coverage insurance but not Gap insurance, so the owner would have to pay the depreciation difference if they had a total
loss of their vehicle and chose not to add Gap insurance to their policy.
What about my leased car...does it automatically come with Gap insurance? Usually Gap insurance is built into the lease but, again, don’t assume it is since every lease is different.
Can I buy Gap insurance from the dealership? Yes, most dealerships will offer Gap insurance but usually at a high premium. Before one decides to buy additional insurance, in any situation, they should always make sure they are not already covered by their current insurance policies.
How do I know if my insurance company offers Gap insurance? Before one decides to purchase their new vehicle they should check with their current insurance provider about Gap insurance. It may already be built into the premium. If it is not one can usually purchase it for a reasonable additional cost. But, some auto insurers do not offer Gap insurance at all. It this case one should try to first find a Gap insurance policy from another insurer before buying it from the dealer since the dealer's premium may be more expensive.
