What Is Gap Insurance And Why Do You Need It

As the name suggests, “gap” insurance tries to cover a difference. The sole purpose of this insurance plan is to cover the difference between the market value of the car, when you bought it, and the amount of money you received as reimbursement, should your be stolen or totaled.  The name of this plan comes from Guaranteed Asset Protection (GAP). Find out more about this policy and decide if you need it. Plus, check our website and get free car insurance quotes from any cheap auto insurance company licensed to sell at your location.

GapGap insurance is usually sold when you buy a new car and you try to insure it. In this way, the insurance provider will help you recover as much as possible of the original value of the car, should it be damaged beyond repair or stolen.

This policy is important due to one things: car value depreciation over time. Statistics show that a new car could depreciate by as much as 37% within the first five years. According to the Insurance Information Institute, a car depreciates in value as much as 20% in the first year. This raises big concerns for the owners of new cars. If you bought a new, expensive car, and you total it or gets stolen in the first year, you will lose a lot of money after the claims is settled. Why? Because all insurance companies will take into account this depreciation factor.

And if you have to pay for a lender, you will have to pay the difference between the total value of the car and the reimbursement from you own pockets.  Gap coverage addresses this issue and makes sure you are covered for the difference in value.

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