Gap Insurance

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What is a Car Insurance & How Does it Work

Clients tend to look for additional benefits that go beyond cheap car insurance options. For instance, it can be a sense of social protection and welfare that often seems unattainable unless it comes with a price. And this price varies when it comes to shopping for auto insurance in particular. What is a Car Insurance? […]

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Common Consumer Questions About Auto Insurance: What is Gap Coverage?

When you buy a new car, RV, or light truck, the value of your vehicle begins to depreciate the moment you drive it off the dealer’s lot. The value of a vehicle you buy new can decline by as much as 20% in the first year that you own it — more if you put a […]

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Practical Manual to Finding the Best Car Insurance Company

Today, it can be challenging to make an objective decision with multiple auto insurance ratings at your disposal. When choosing insurance online, potential policyholders tend to look for financially sound providers with affordable coverages and value-added services. Professional insurance comparison is a perfect choice if you want to use a comprehensive approach to selecting the […]

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Auto Insurance Explained: How Does Car Insurance Work?

Securing your property and making sure that you are financially covered in case of an emergency is essential for any human being. The same applies to сhoosing a convenient way to travel or get around. And since cars tend to be the most popular choice, every owner needs to consider an additional security layer — insurance.

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What Is Gap Insurance?

No matter how much you love your car, it starts depreciating from the very instant you bought it. An average car loses about 20% of its value in a year. What’s more, whether you buy or lease a vehicle, you might end up in an unpleasant situation when the car is badly damaged or stolen and you somehow owe more money than your standard auto insurance covers.

How come? Well, the standard auto insurance policy covers the depreciated value of a car – that is, the value of a car at the time of the insurance claim – which may not be enough to cover the full amount you owe. However, that can be fixed with gap insurance, which covers the difference between the actual value of a vehicle and the amount you owe on it.

What Does Gap Insurance Cover?

To better understand how gap insurance works, let’s imagine Joe’s car is currently worth $50,000 while he still owes a total of $65,000 on the contract. Should Joe’s vehicle be totaled or written off, his standard car insurance would cover only $50,000, whereas he would have to pay the rest from his pocket. However, if he had gap insurance, the $15,000 gap would be covered.

The typical situations when purchasing gap insurance may be reasonable include:

How Much Is Gap Insurance?

Gap insurance can be offered by both card insurers and car dealers, though the former typically charge less. Cost-effective gap insurance may cost you a minuscule $20 annual addition to your car insurance premium.