Many drivers make the unfortunate mistake of not educating themselves about gap insurance. The most difficult part of this is that regrets come with a lot of hefty expenses – to think that these expenses could have been avoided if the driver concerned just took the time to know what gap insurance is all about. Thus, what is this type of insurance really all about?
This type of insurance actually provides protection and coverage – the kind that a traditional car insurance policy no longer provides. When it comes to leasing or purchasing a new car, by all means, you should consider taking out this type of protection.
Just what kind of situations would warrant the need for this protection? Let us say, for instance, that you just purchased a certain car pegged at $35,000. For this car, you had to take out a loan to make that payment of $35,000 so technically, you still owe your bank that amount. Now, let us say you have made roughly 3 monthly payments already, with your interest rate pegged at 6%. However, the most unfortunate accident happened, leaving your car totaled. When you report this accident to authorities, they inform you that your car, which was valued at $35,000 before, is now worth just $25,000. The problem now is that your bank is not going to let you pay just $25,000 because of this new appraisal after the accident. The bank would still ask for the full $35,000, thereby giving you a gap of $10,000. Now, that would indeed be a major problem – but not if you were smart enough to take out a gap insurance policy of your own.
Your policy would handle the $10,000 difference for you, making it easier for you to handle the expenses as well as loss of your car. In the situation discussed above, your car has already been totaled. This means that you can no longer drive your car so it is totally useless. However, you are still legally required to make the full payment of $35,000 – that would be like adding insult to injury! Gap insurance literally saves the day, so to speak.
There are many insurance companies selling this type of car insurance today so finding one will not be difficult at all. The difficulty lies in the narrowing down of choices here, which would make the task more time-consuming. If you have a reliable internet connection, you can easily browse the online market for quotes that you can compare. Remember to shop around so that you are able to make a more educated choice.