Not many people are familiar with GAP insurance, yet it is very advantageous for car owners and worth looking into. GAP stands for Guaranteed Asset Protection. This insurance policy is very easy to explain using an analogy. If you buy a piece of jewelry using your credit card, and you accidentally lose it, by the time your billing statement arrives, you will still have to pay for that expensive purchase.
This same example is true with cars. Most people could not afford to buy cars in cold cash, so they resort to staggered payments usually distributed in a period of 2 to 5 years. In this duration, accidents can happen. The car can be stolen or figure in a hard collision beyond recovery. Such a misfortune will not save you from finishing your installment payments. However, if you get GAP insurance, it could pay off the remaining balance for you.
It is very easy to dismiss this insurance plan as unnecessary especially if you will compute the odds of your car getting lost. Out of millions around, what are the chances that a thief will take interest in yours? However, if you ask those who have been robbed in the past, they will surely tell you that they thought along the same lines too, until their worst nightmare happened. Only then did they learn their lesson and applied for GAP insurance for their next car.
A car owner is often hesitant to get additional coverage when they think of additional expenses entailed to it, but regret always comes in the end. If you think getting this insurance is not worth the trouble, will it still be troublesome when your car accidentally got lost? Will it still be troublesome once the bank starts to demand payment on a car that is not in your possession anymore?
If you will think of this insurance as a form of security, the additional expense is really just minimal compared to how much you will be able to save in the future if your car gets lost in whatever way. Your money could be put to good use into buying another car rather than using it to pay off something you do not have anymore.
You will better appreciate the advantage of GAP insurance if you understand the market value of cars. Depreciation rate is high. If a car accidentally got lost at a future time, you will learn its present value to be lower than its original tag price. Your regular car insurance could not cover for this difference, but GAP can very well handle it for you.