Auto insurance is a requirement in most areas, and with good reason. It offers financial protection in the event of an accident, theft or vandalism, protecting you as well as other drivers on the road. However, standard auto insurance covers only the current value of the vehicle, leaving a gap between what you owe and what the policy covers. This is where gap insurance comes in. In this blog post, we’ll explain what this type of insurance is and how it works. This will also help you make an informed decision about whether it’s right for you.
What Is Gap Insurance?
This type of insurance covers the difference between what you owe on a vehicle and what the standard insurance policy pays out if your vehicle is stolen or totaled. It’s designed to cover the potential negative equity gap between what you currently owe on your car and its market value in case an incident occurs. It provides protection to those leased, financed or recently purchased a car, who owe more than the vehicle’s current value. Without gap insurance, you may find a significant financial burden for paying off the balance of the loan or lease.
How Does Gap Insurance Work?
If your car is declared a total loss, your collision and comprehensive coverage pays out the car’s current value. Which can be less than what you actually owe. This type of insurance coverage pays the difference amount to the lender. Making it a valuable option for those who have borrowed significant amounts to buy or lease a car. There is usually has a one-time payment, but it can also be included in your monthly payments.
There are various types of gap insurance coverage.
- Return to invoice.
- Vehicle replacement.
- Lease gap.
Return to invoice covers the difference amount between what you paid and the amount you received from insurance. Vehicle replacement covers the cost of a new car rather than just the value of the previous one. Lease gap insurance is made for people who lease vehicles and usually works similarly, with coverage up to a certain amount or percentage.
How Do I Get Insurance?
If you’re looking to purchase gap insurance coverage for your car, you can do so through your Greenville insurance agent. Many insurance companies offer coverage, and you may be able to purchase it as an add-on to your standard auto insurance policy.
Gap coverage is not the most well-known auto insurance option, but it is a vital one. Finding yourself in a situation where your car is totaled or stolen and ultimately owes more than you originally estimated, you’ll be relieved to have that extra coverage. Getting gap insurance for your car might be a wise decision if you owe a lot on your car or if you’re leasing it. As we’ve explained in this blog post, gap insurance can be a significant security. You’d be wise to consider it before making your next vehicle purchase. Talk to our insurance team today to see whether this type of insurance coverage is right for you.
Disclaimer: This article is not expert advice. Limitations and conditions may apply. Premiums will be based on benefits chosen. Please check with your local Independent Insurance Agent for details.
