What is Gap Protection?
Did you know that there is no such type of insurance policy as “full coverage”? What many drivers are thinking of when they use that term is “comprehensive coverage” and “collision insurance.” In fact, the term “full coverage” is misleading in that you may not be fully covered if you total your car and you still owe more than what it is worth. That is why gap insurance was created. What is gap insurance on a car? What is gap protection used for? Our finance department wants you to be fully informed so that you can have adequate coverage. So, we answer those questions below and help you understand if you need this kind of policy.
What is Gap Protection and Why Do I Need It?
What is gap insurance on a car? The purpose of this kind of policy is to ensure that your auto loan is completely covered in the case of your car being totaled, regardless of how much you still owe. Comprehensive insurance will only pay what the car is actually worth. But that may be less than what you still owe on it. For instance, say your car is worth $4,000 at the time it is totaled, but you still owe $5,000. Collision insurance will pay the $4,000, leaving you with the responsibility to pay the difference. A gap protection policy will pay that difference or “gap” under certain circumstances.
What is Gap Insurance on a Car Designed to Cover?
What is gap protection on a car able to cover? This policy provides coverage when your car is totaled by the following:
- Theft
- Fire
- Vandalism
- A traffic accident
- A natural disaster (or “act of God”)
Should I Get Gap Insurance?
We strongly suggest drivers opt for gap insurance when the following applies:
- Your car is leased
- The down payment on your loan was less than 20%
- Your loan was for 5 years or longer
- Your latest loan includes the payoff amount of an older loan
Talk to the Finance Department at Sam Leman Automotive Group
Come in and talk to our finance department about your insurance options. They’ll be happy to help. And, if you’d like to learn more, check out our posts that explain what liability insurance does and the difference between collision and comprehensive insurance. We’re located conveniently near . So come in for a test drive or contact us today!
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