GAP insurance should prove very useful if ever you would get into a road mishap, or should someone steal your car. Although it would mean shelling out more cash to pay for it, it will surely be worth it in the end.
Being more of a “supporting” kind of contract, GAP insurance actually closes in on the remainder of what you should pay, or balance of the purchase price of your car. It can also be used for any other purpose for as long as there is an amount that must be paid. In effect, it means that whichever balance is outstanding is secured by an insurer. This also means that you are free from worrying about how to settle your balance should something really bad happen to your car before fully paying its price.
Despite this negative notion of getting GAP insurance, there are several reasons why you should get it. Here are a few.
When leasing a car, owners may require you to get insurance on the balance you have to pay. This is for both your protection. Because you must not exceed a certain mileage when you use a vehicle, exceeding it will cause it to depreciate. Normally, you will be required to give additional payment if that happens. Getting insurance will help relieve any worries about exceeding mileage if ever you have to use it over and over again.
When buying a new car, you usually pay for it in stated installments. Rarely does a customer pay for the whole value of a vehicle up front. Thus, when you have paid the cash out value, you get to take the car home. Since you still have to pay for the remaining amounts, you may get insurance to secure its payment in case the car gets totaled or gets stolen while in your possession. Do not take this lightly; a lot of cars get destroyed or stolen a few hours after they are taken out of a dealership.
In buying used or second-hand cars, even those which have just left the dealership two days ago, you may still get GAP insurance to secure the balance you have yet to pay. However, there is a vehicle lifetime that you should observe. Normally, if a car is less than two years old from first sale, insurance companies will grant coverage. However if it is older, there is a greater chance that you will be denied, given the condition the car is currently in and the fact that its insurable value has greatly diminished. Getting this insurance has its own benefits that you should definitely look into.