A lot of car owners get into situations where they may need Guaranteed Asset Protection insurance coverage, more commonly known as GAP insurance coverage. However, not a lot of people actually know what this coverage is for. This is the type of coverage that covers what your regular auto insurance policy may not. Learning more about this insurance coverage and why you may need it can save you a lot of cash and headaches in the future.
In what situations would GAP insurance be needed? This coverage is important if you are leasing a vehicle. It is also smart to have this type of coverage if you made a small down payment. GAP ensures that you get the vehicle’s value in a way that you would not under regular insurance coverage. Take the following situation to learn more.
Let’s say you have just purchased a brand new, stylish sports car for 30,000 dollars a couple of months ago. You have made a couple of payments at six percent interest rate. All of a sudden, something really unfortunate happens and your brand new car gets in a total wreck. You contact your auto insurance provider and they say that the brand new car or vehicle which you paid 30,000 for is now worth only 20,000. The problem comes when the finance company says that you need to pay them the complete amount. So what are your options at this point?
If your car is under a GAP insurance coverage, this would not be an issue because GAP will pay for that 10,000 dollar difference. GAP is also applicable if you put a little down payment on a car or vehicle and something unfortunate happens. The dealer is going to ask for a full payment and the insurance company is going to be able to shoulder a certain amount. This is where the importance of GAP comes in. From these situations, it is really easy to see that GAP can also be beneficial for new drivers, as well as teenage drivers.
You have to be very careful, however. If you have GAP coverage, but do not have collision and comprehensive coverage, you may still be in a difficult situation. Keep in mind that GAP is only a supplementary coverage. If you plan on purchasing or leasing a vehicle, make sure to ask your automobile insurance provider about GAP insurance coverage to make sure you are completely covered in the event of an accident. This might just be one of the smartest things that you can do.