Have you just bought a brand new or used car or just rented one and have not yet paid in full amount? What you need to consider here is getting a guaranteed auto protection insurance or more commonly known as GAP insurance. Now what is this gap insurance? This has coverage beyond any normal auto policy. With this, in case you damage your loaned or leased car, a company will pay the current value of your vehicle (usually 20-30% less than the initial selling price), as well as its difference from its original cost.
Now, for a more concrete example for you to understand the importance of a gap insurance, imagine that you were driving your nifty new automobile, the one that you have always wanted ever since, and you have finally saved up for the down payment. You drove around the neighborhood to show off your pride and joy, and finally went home to rest and dream about it more. The next day, excited to see your shiny new car, you went outside to check it out but it was gone, most probably stolen! Other than worrying about losing it, you will also think of the money you still owe the car company where you bought it. Now if you explain to them that it got stolen, they would never understand and still demand you to pay for the amount of money that is due to them.
Moreover, let us say that you have a normal auto insurance that would cover only $18,000 of your, originally, $25,000 automobile. Of course, they would pay less than the original price because once you have driven it out of the shop; its value will start to depreciate. Who would pay for the remaining $7,000? Now this is where gap insurance enters. With this, a car insurance company will also pay for the difference between the current value or your vehicle and its initial price, saving $7,000 that you were supposedly shelling out.
This gap insurance will not only pay for stolen cars, but also for those that are vandalized or caught in an accident. Hence, if you pay a little bit more than your monthly insurance rate for a gap insurance, you will save loads of money in the future, especially for a loaned or leased car on its first few years. If you are diligent enough to look for an equally good, but cheaper gap insurance, you might save a bit more.