People look into so many options first before buying insurance coverage for their cars. After being briefed about the different types available, many are attracted to gap insurance because it pays for the difference in market value and actual value of a car at the time of accident. This may sound really good, but one should ask also if he really needs it. Not all kinds of cars must have this insurance.
Gap insurance is only required in leased cars because it best protects a car especially if it is brand new. Even if a driver does not own the vehicle, in case an accident happens on the road, he will still be financially responsible for the cost of repairs. However, most drivers do not have this capacity. If ever they do, some are unwilling to shoulder the expenses. Hence, to be on the safe side and to avoid future hassles, leased cars are applied with gap insurance.
This type of insurance is not required anymore if a car is not leased. One who finds this unnecessary should be wary when buying a brand new car. There are car dealers who automatically include gap insurance in car loans and buyers are left paying more for something they do not really want in the first place. This happens because it is usually standard protocol for most car manufacturers to give the best kind of insurance they deem fit for their clients. However, a car owner should be the one to decide which policy is best for him depending on his personal needs and limitations.
How does one evaluate himself to decide if he really needs gap coverage or not? For a large part, it will depend on his financial capabilities. He could ask himself a simple question. If his newly bought car gets totally wrecked after just two weeks, will he be able to pay for the loss amounting to the market value minus depreciated value of his car?
Other than financial capabilities, it also depends if one is a risk taker or not. If one is confident that nothing unfortunate could happen to him while driving, then buying gap insurance might just be a waste of money. If a brand new car will be used by several members of the family, getting this insurance might be more reasonable.
It is also important to note that some car loan companies are willing to take care of the gap value in case anything happens to a newly bought car. Thus, before looking for insurance options, it is good for buyers to clear up loan agreements with their loan company first.
