What is Gap Car Insurance and Do I Need It?

Do You Need Gap Car Insurance for your Car?

The first question I’m sure that comes to your mind is what is Gap Car Insurance? And whether you really need it for your new car? This insurance like many other types of insurance is not necessary to purchase when you buy a car. But by not buying this insurance you might be open to some losses. Read this article to get a better understanding of gap car insurance.

Basically, it provides the coverage against the difference between market value of your car and the loan amount. But aren’t the two the same, that’s what you might be asking yourself. For example if you buy a car at $25,000.As soon as you drive the car off the lot, it’s cost depreciated by almost 20%. So now your car worth is about $20,000. Now in the event that you have an accident and you do have the full coverage including comprehensive and collusive coverage you will still get coverage on the present market value of the car and that is $20,000. So what gap car insurance is doing is that it’s covering the $5,000 difference.

There are different kinds of gap car insurance policies available in the market. Some provide coverage in case of theft or losses, and some don’t, so try to find what is exactly covered in the policy. Getting gap insurance is a good idea if you are buying a new car and if you think that you can’t cover the difference between the market value of the car and the loan amount. Also remember that older cars are not covered under it, in most cases.

Although getting a gap car insurance policy is not necessary, you might want to think about. It could help you in case your car gets damaged in an accident or even in case of theft shortly after the purchase.

It is important to know that if you are buying your car from a dealership and decide not to take gap car insurance at the time of purchase, along with regular car insurance then you might have to pay a higher price for it later on.

Before buying a gap car insurance check whether this insurance is contained in the existing policy. If unsure give us a call, we can answer all of your questions concerning your car insurance and gap car insurance.

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