Gap Auto Insurance

A $25,000 vehicle on an installment plan that is involved into an accident after three months may only be worth $20,000. While losing 20% of the value, the dealership may claim that the client owes $27,000 for the tax, title and license fee. $20,000 of the $27,000 may be the only portion that the insurance company covers, which may leave a gap in what the client owes and the value of the vehicle. Gap auto insurance may be able to assist with this gap.

This insurance typically works the best when the accident repairs are more than the actual cost of the vehicle. A client might spend more than the actual price on a secondhand car. Gap insurance generally makes sure that what the vehicle is worth is only what the client pays, and it is typically offered on vehicles that are at least two years old. 0% finance deals may be obtainable for cars that are new, but within the first year, clients may be unable to obtain payoff on a claim due to an accident because the vehicles are typically depreciated.

When exchanging the higher costing vehicle with of a lower costing one, the client may be able to transfer the amount to the new financed loan. If a client gets into an accident in a rental car, they are typically responsible for any repairs that need to be done. However, if the rental payments are less than the value of the rental car, there may be a gap in the actual value and what the client pays.

Collision and comprehensive coverage may be a requirement, as well as maintaining payments until the indemnity company pays out. For more information about choosing indemnity for your vehicle, read How to Select Among All Types of Car Insurance?