Got Gap? This Coverage Can Really Save You
You've only had your new car for a few months and unfortunately someone's just rear-ended you into another vehicle. Everyone in your car is fine, thank goodness. But, it looks like your four-wheeled baby is done for.
You take in a deep breath and try to relax. The insurance will cover it all, right?
Wrong! Now's the time to be asking yourself this question: Got gap?
What's gap insurance and why should you buy it?
Gap insurance is a coverage policy that the fills in for the gap between what your regular comprehensive and collision policy will pay and the actual amount you owe on your vehicle.
What's this, you say? Won't my regular policy cover it all?
The answer to that question is a big unfortunate no. Most insurance policies only cover the "fair market value" of the car. So, if you paid $30,000 for that brand new vehicle and drove it off the lot, it's already lost value. How much of a value loss will depend, of course, on the kind of vehicle, how many miles you've put on it and how old it actually is. But, the end result is the same. There's going to be a "gap" between the car's actual value and what you owe on it.
With regular insurance only, it means you're left holding the bag on the difference. While it's true if you're not at fault, you might be able to recover this amount from the responsible driver, but in the meantime you're going to have to make payments on a car that won't run. Otherwise, you put your credit in jeopardy.
It's a sad but true fact that many motorists don't realize. This is where gap can come in and really make a big difference. By paying what's left over after the regular insurance policy has reached its limit, the gap coverage can save you from having to continue to pay for a vehicle that's no longer operable. It can, in fact, save you some major headaches.
All that makes gap sound pretty good, but is gap expensive? Not, generally. The coverage typically costs a very small pittance in comparison to what it might save you down the road.
So, if you're getting ready to buy a new car, or you already have, gap is probably a good option to consider. Most car dealers can point you in the right direction. The beauty of gap is that is makes sure the slate is wiped clean so you can quickly get on with your life.
