What is GAP Insurance?

New vehicles begin to depreciate as soon as they leave the lot, but most insurance agencies only cover the market value of the vehicle in the event of an accident. That can leave a gap between what the insurance company will pay and what you owe if the vehicle is totaled. Fortunately, GAP insurance can help make up the difference and prevent you from losing thousands on a vehicle that can’t be driven.

GAP Insurance

What is GAP Insurance?

In most cases, GAP insurance is an add-on feature that covers the difference between what’s owed on the car and the car’s value at the time of the claim. For example, if you owe $15,000 on the car, but the value is only $10,000, then GAP insurance kicks in to cover the difference.

Should I get GAP Insurance?

GAP insurance is usually a good idea if you’re putting less than 20% down, or financing for longer than five years. Generally, leases require the lessee to have GAP insurance. You may want to consider GAP insurance if you rolled over negative equity from an old car loan, or recently purchased a vehicle that will depreciate quickly.

Contact Us With Questions

In most cases, GAP insurance is an affordable way to gain extra peace of mind behind the wheel. The additional insurance adds only a slight increase to your policy’s annual premium.

If financial jargon isn’t your forte, just stop by Hiley Volkswagen of Arlington to have our Finance Department explain GAP insurance in simple terms.

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