Guaranteed Auto Protection (GAP) Insurance.
Guaranteed Auto Protection Insurance, more commonly known as GAP insurance, is a financial bridge meant for people who do not own their vehicles. This insurance coverage is the financial bridge between what a person owes on his or her vehicle and what the vehicle is estimated to be worth. GAP insurance is designed to pay off the difference between the market value of the vehicle at the time of the accident and the amount you owe on your vehicle loan. GAP Insurance can be purchase by anyone who has a loan on a new vehicle and can also be purchased by drivers who lease a new vehicle.
New cars quickly lose their value within a few months, sometimes up to 20-30 percent. This means that if you are in an automobile accident shortly after buying or leasing a new vehicle, without GAP insurance coverage, you could end up paying the 20-30 percent difference between the price at which you purchased your vehicle and the market value of the vehicle at the time of the accident.
The following explanation is an example of how GAP insurance can cover you, your vehicle, and your pocketbook:
You purchase a vehicle for $20,000, put $2,000 down and get an $18,000 loan. Within the first month of purchasing your new vehicle, you are in an accident and total your new vehicle, and the insurance company is willing to pay you $15,000 to settle the insurance claim. You still owe $18,000 on the car, so $15,000, which is the MARKET value of your car at the time of the accident, would not be a sufficient amount of funds to cover the expenses to pay for the vehicle. Although you paid more for the vehicle than what it’s currently worth, within the first month, the car has already depreciated. If you purchase GAP insurance, the insurance company would cover the difference between the insurance company’s settled claim offer and what you owe on the car, which would be $3,000. Without GAP insurance, you, as an individual, would be responsible for the out-of-pocket expenses that incurred as a result of the accident.
GAP insurance coverage is not a mandatory part of an overall vehicle insurance policy, and although purchasing this type of vehicle insurance is highly recommended, the financial institution you receive your loan from does not require it. There are, however, some lease contracts that state it is mandatory for lessees to have GAP insurance coverage, and some vehicle leasing companies could include GAP insurance in the lease agreement for a fee.
If you just purchased a new vehicle and you are interested in purchasing GAP insurance coverage, contact an insurance agent at Oasis Insurance. Oasis Insurance has several locations throughout the valley and prides itself on exceptional customer service as well as being a provider of the lowest rates for car insurance, and other types of insurance such as renter’s insurance, home insurance, boat insurance, and more. The staff at Oasis Insurance works with over 30 insurance companies so they can always find you the lowest insurance rate possible.
Tags: auto, Guaranteed, Insurance, Protection