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Gap Insurance Coverage

Gap insurance coverage is a must for anyone leasing a car or who has recently financed a car. In fact, most leasers require the drivers to purchase gap plans, so you want to be sure you follow these requirements for your personal or family auto insurance. Even if you have been insured for years with a traditional plan, you may have never realized the benefit of obtaining a gap plan, or may have never heard of the option. On the flip side however, if you were stuck with loan costs after an accident with a newly purchased vehicle, you may now realize the full importance of obtaining gap coverage from an insurance provider.

This type of plan can be thought of as filling the gap between the loan amount you took out for a vehicle and the amount that an insurance company determines it is worth if it is totaled after an accident. For example, if you recently purchased a car for $30,000 and took out a loan for that amount, the car likely lost 20 percent of its value just after you drove it off the car lot, because this is the typical depreciation amount for vehicles. Then, if you are involved in an accident shortly after purchasing the auto, the adjuster likely determined that the automobile was only worth $24,000 taking into account the 20 percent depreciation.

What this math means is that you took out a loan for $30,000 but you will only be receiving a $24,000 payment from your company to cover the costs of losing the totaled vehicle. This is a $6,000 loss that you will somehow have to pay back to the loan company. However, if you had gap automobile insurance coverage in this type of situation, that provider would cover the difference between the amount the traditional provider paid you and the left over amount on the loan. Therefore, you wouldn't have to stress about paying back loan money for a totaled vehicle while trying to purchase another car.

Each gap car insurance coverage plan has different terms so you will need to closely evaluate the terms of the policy that you choose. You should also familiarize yourself with the claims process to ensure everything goes smoothly and also that you get the money you need. Some gap providers require you to keep making payments on the left over loan amount until their plan kicks in and pays off the rest of the loan, so you will especially want to pay attention to this requirement otherwise your credit could be effected.

Finding Gap Policies

There are many ways to purchase gap insurance coverage so you will need to determine which is the best method for you. Some car dealers offer a stand alone plan that you can purchase when you are first buying the automobile. Another method that is often cheaper is to use a gap insurance coverage add-on to a regular insurance policy. Most providers offer this type of add-on service and it will act as sort of a package deal with a regular type of policy you are debating on purchasing.

If you do decide to utilize a gap auto insurance coverage option when purchasing regular policies, you will still want to go through the process to compare car insurance quotes to ensure you are receiving the best deal. If you have never purchased car coverage before or didn't feel you got the best deal in the past, here are a few tips to help you find a better rate this time.

Finding Low Cost Policies

The best way to request auto insurance quotes for anything from standard policies to 3 month car insurance is to search online. The Internet has greatly simplified the process of finding both regular and gap insurance coverage because you can request vehicle insurance quotes from multiple providers at one time. This means you will spend less time searching for coverage and more time on the road driving your vehicle.

Once you receive multiple quotes, you will need to take some time to evaluate each offer. This process includes looking at the coverage offered in each policy including the terms of the gap vehicle insurance coverage add-on option. Certain terms you will want to evaluate include deductible amounts, coverage offers, and any discounts that are available. You will want to evaluate these things in addition to comparing the premium amounts to make sure you select the policy with the best overall coverage.

Hopefully by selecting a policy that includes gap insurance coverage, your newly leased or purchased vehicle will be covered in case an accident occurs. The last thing you want to occur after making a large financial commitment to a car is to be in debt by several thousand dollars because your regular provider didn't cover the difference between your loan amount and the actual cash value of the vehicle.


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