They that the most frightening accident that could happen to your car is one that leaves it an unmanageable wreck at the time when you have not yet even paid a fourth of its entire price. This is why, just like many motorists who pay through loans or leases, you usually double your fretting when driving through a busy thoroughfare with a ride that is just fresh out of the car company’s lot. That is understandable, especially if you do not have gap insurance.
Your car, no matter how new it is, is fated to undergo what almost all things must suffer: depreciation. By the time you drive out of the lot to bring your newly bought car home, the depreciation counter begins to tick. In three months, it would already slash off 20% to 30% from the original price. To get an idea of how much your car has depreciated; have it evaluated by your insurance company. The result may indeed surprise you. You would dread more the possibility of a vehicular accident, especially one that leaves your car ‘totaled’, incurring damages, which repairs would cost more than your car’s actual worth.
Theft and accidents like fire and flood that may result into your car being totaled can be such a disaster if you have not completed payments. Your insurance, after considering the depreciation cost, may just provide you with an amount much less than what you actually owe. That is even if it provides you with full coverage. The next big problem would be paying for the difference. Your most probable step would be getting it straight from your pocket. With today’s economic problems, that can certainly be cruel to your budget. However, without gap insurance, you may have no other choice.
A scheme that also covers the difference or the gap between the actual worth and the purchasing price of the car can be any car owner’s wish. That is, precisely, how gap insurance works. If ‘total’ disaster occur, it pays for the difference, the amount that the ordinary insurance would not cover but the car company would still seek. Some firms who offer this would even cover for the regular insurance fees. For collisions that may be blamed on you, however, it would deduct the corresponding collision fees from the amount you are going to receive.
Many firms offer gap insurance along with the entire insurance package for your car. However, some also give it as an option for the car owner. Since it is an important feature, you should ask your insurance company about it and get one if you do not have any.