What is Gap Insurance?
While your Auto Insurance policy will reimburse you for the value of your car, it will only pay you the cash value. The difference between the cash value and the remaining loan amount is called the “Gap.”
Did you know most Car Insurance policies will only cover the actual value of the car and not the total amount of money owed? This means that if you get a loan from a bank to buy a vehicle for $10,000 and it gets totaled, most insurers will only pay book value of the vehicle. So you have a loan of $10,000 and the insurance company values the item for $6,000, you still owe the bank $4,000. This is where Gap Insurance kicks in. When you are insuring your new vehicle, ask about Gap coverage so you don't get stuck paying for a vehicle you no longer own!
When is the best time to get Gap Insurance?
Whenever you have a loan! But, a lot of people think the best time to own this coverage option is in the first few years of a car loan. We disagree. When you first buy a vehicle, the value will stay relatively steady the first couple of months to one year. After that, the actual blue book value of most cars will decrease dramatically - but your loan won't. If you can’t pay cash for your vehicle (few of us can), then you will probably have to finance your vehicle payment with a bank or some sort of financial institution. And if your vehicle is totaled and cannot be payed off, that bank/financial institution will state that you signed the papers for the loan and you are responsible to pay it off, not the insurance company. (Harsh but true).
At Langlois Insurance Agency, we offer competitive Gap Insurance that won’t leave you in the proverbial lurch.
For more information on Gap Insurance, contact Langlois Insurance Agency at 800-914-1296 or fill out our online form above for your FREE Gap Insurance quote today.
Written by DC don't change