When it comes to insuring your car, there are many different types of policies and options available. Choosing the right coverage protects you from financial hardship after an accident or vehicle theft, but navigating the different types of policies isn’t always easy.
If you have purchased a new car, you may be wondering if guaranteed auto protection, or Gap, coverage is the right option for you. In order to make the right decision, it is important to understand what it does and how it can benefit you.
Understanding Vehicle Depreciation First
While your comprehensive coverage might cover the cost of replacing your vehicle, it will only pay out the current value for your car after a total loss or theft. Since a car begins to depreciate in value the second it leaves the dealer lot, you might not get a lot for your loss. If you financed your car, you may be left making payments on a car you no longer own.
Understanding Gap Insurance
This is where Gap coverage comes into play. Also known as guaranteed auto protection insurance, Gap insurance covers the gap between what you still owe on your new car and its value at the time of the loss or damage. When you purchase this type of insurance, you won’t have to continue making payments on a car you can no longer drive.
Deciding If You Need Gap Insurance
In some situations, Gap insurance may be required in the terms of your loan. Lenders often require this coverage for new cars so they can recoup the cost of the vehicle even if it is totaled. When you finance your new vehicle, make sure the lender is clear about the need for Gap coverage and how much you must insure your car for to comply with the terms of your loan. Should you choose to lease a car, you will likely be required to carry this type of coverage as well.
Many insurance companies require you to carry comprehensive and collision insurance for your vehicle as well, so be sure to talk to your insurance agent about the requirements for your policy might be and how much everything will cost.
What Gap Insurance Does Not Cover
There are limitations to your Gap policy that you should understand before making a purchase. Gap coverage does not apply if/to:
Your car is repossessed or if you are unable to meet your monthly payment obligation to your lender
The cost of repairs, such as dent removal, paintless dent repair, frame straightening or any damage to your vehicle from an accident that would typically be repaired by an auto body or collision repair shop.
Reimbursing you for the cost of roadside assistance or towing
Remember: Gap insurance policies only apply if your car is a total loss.
Can I Get Gap Insurance For a Used Car?
Gap coverage is typically only taken out for new cars, but there are some situations that might call for this type of insurance for a used car. If you are buying a car that is only a year old, Gap insurance might still be an option for you. Talk to your insurance agent about whether or not you can benefit from this coverage for your used car.
Where Should I Purchase Gap Insurance From?
We highly suggest that you purchase Gap insurance from your auto insurance company, a lender or a credit union. Car dealerships will urge you to purchase it from them, but that’s because they retain commissions as high as 50% of the policy premium.
Auto insurance companies, lenders and credit unions will give you a much better price! Remember that Gap insurance is not solely available at the dealership!
Benefiting from Gap Insurance
Choosing the right car insurance is essential for protecting your investment. While you don’t want to buy more coverage than you actually need, Gap coverage is one way to make sure you don’t have to pay for a car after it is totaled. If you are considering the purchase of a new vehicle, take a moment to consider the benefits of Gap coverage for your purchase.
If you’ve been in an accident, but your car is not totaled, Badell’s Collision can help you restore your vehicle with our auto body repair, dent repair, and painting services. Call us today and speak to the friendly staff at either of our locations in Aston or Malvern, PA.