All things depreciate and your car is not an exception. In reality, as soon as you come out from the sales lot, its value will start to lower down. Sounds unfair for a car owner like you, but that is how things work here. It depreciates so fast and you do not want to think of it let alone involve in a car accident. However, what if after 5 months your car suffered a minor dent or a total wreck. What would you do? This is where the gap insurance sets in.
Many people are not familiar with this type of insurance until now. This is because, insurance agents and car dealers rarely offer or talk about it when making their offerings. Gap Insurance is a short name for Guaranteed Asset Protection. So exactly, how gap insurance would be able to help you? Here is a simple explanation.
Gap insurance takes care of covering the different between the vehicle’s market value and the money you owe to it. This is the reason why, it is prudent that you avail of gap insurance quickly during the time you purchased the car because its market value it still high. Doing so will reward you with high compensation in case you suffer an accident or theft.
Experts say that your car’s market value depreciates at a rate of 20% the moment you drive it away. The depreciation does not stop there and continues as long as it stays with you. At any instant, you suffered an accident; the insurance company is only obliged to pay you the car’s market value. However, if you have gap insurance, you will have a peace of mind that you can get replacement in case the car is totally bushed. Now you see why getting a Gap insurance will save you from unscrupulous dealers and insurers.
You might be thinking that this is yet another expensive policy, but it is actually not. Your investment today will pay off tomorrow in case your insurance company cannot give you the protection that you need. But remember, you need to get it as quickly as possible right after buying your car. Do not waste time or your car’s market value would be equal to the amount you owe on it.
Lastly, there are cases that you do not need gap insurance at all. For instance, if you are the one financing your car, and your policy coverage can pay the amount in full, I see no point of having one.