There are many types of coverage car insurance companies can provide. Depending on one’s needs and preferences, one can pick as much protection as he/she needs.
However not all the coverage types are necessary. As some would say there is such a thing as “too much” even with purchasing car insurance policies. With today’s economy and type of financial stability being practical with the things, items, products and services purchase is just the right kind of attitude needed. If not all policy coverage are necessary then it is wise to know what you realistically need before purchasing a policy. You can only do this if you have a full understanding of what the coverage types are for. Knowing the services offered by each type you can easily decide what to avail.
One of the coverage types that are deemed necessary for special cases is the gap insurance. Indeed not everyone needs this type of insurance for this serves a special purpose for a specific type of situation.
An insurance that covers the difference of what you owe on your car and how much your car is worth. This might sound familiar to you for this is the common definition offered to respond to the query “what gap insurance is?”
Those who purchased or leased their new ride will mostly be offered with gap insurance. In case you are one of them and you were not able to settle a bulk for your down payment you may really need gap insurance.
The gap insurance will literally handle the gap that might exist between how much you owe on your car and how much it’s worth if it’s totaled as a result of an accident or theft.
For instance after an accident your car insurance company decided to total your car since repairing it would cost more than its actual worth. Let us say you got your car at $25,000 and you have not settled any payment yet leaving you with full $25,000 owed money from your lender. After the accident your car’s actual cash value dropped to $22,000. Your insurance provider would pay $22,000 less the insurance deductable which costs $500 therefore they will take care of $21,500. In this case the gap between what you owe and what your car’s worth is $3,500. This amount will be the one covered by a gap insurance which means you will not have to worry about $3,500 worth of difference.
Gap insurance is not offered by all insurance providers. The services included and the details of this coverage may also vary depending on the policies of your provider thus it is best to ask prior to making a deal.