For those who are looking for the best deals and cheapest insurance rates will ultimately find relief in low cost car insurance coverage. After all, is there any need to pay for something that you don’t really need?
There are “yes’s” and “no’s” but from our own standpoint, it all depends on your situation. There are some cases were paying more for insurance will result in greater benefits and fewer headaches.
Auto insurance policies only take effect after your car is damaged or stolen. The value of the car at the time of the accident is usually the amount that you will receive. However, what if the car is loaned, or you owe a substantial amount of cash just before your car was stolen or totaled, you are in serious trouble. What we are talking about here is not hundreds but thousands of dollars.
We are almost sure that we have discussed cheap and low cost insurance in the past and since the severity of this topic merits one blog post, we have decided to do this today.
Many people don’t realize how important guaranteed auto protection (GAP) insurance is and go on with their lives, like nothing will ever happen, purchasing cheap insurance rates. This rider policy takes care of the full value of the car the time it was damaged or totaled. Apart from that, it also indemnifies the difference between the car’s market value and the amount you owed.
To visualize the topic, let us consider this scenario. As soon as you drive your newly purchased $30,000 car towards your home, the amount of the car will be automatically reduced, to as much as 10%. This seems to be the norm and car insurance companies know that beforehand. This is the reason why buying a second-hand car that’s only a few months old will enable you to grab it at a good price.
The idea behind this is simple. The moment you drive a car outside the dealer’s display lot, the car’s worth becomes less and less. The catch is that your low cost insurance will not cover the difference between your loan and your car’s reduced value. Only the GAP can do this and usually not included in the said type of coverage or any other standard policies.
GAP insurance is needed if the money you owe for your car is more than the amount that will be covered by your insurance policy. If you can’t decide whether GAP insurance is worth the investment, read the following guidelines below.
- You need GAP insurance if you recently bought a car and your down payment is less than 20%.
- You need GAP insurance if your car is leased.
- You also need GAP if the loan is payable for more than four years.
There are some other cases where you may still need GAP insurance. It is best to talk to your insurance agent to clear things up. There are many online resources about GAP insurance on the Internet and on this site. Be sure to read them thoroughly and many times if needed and since GAP insurance is usually a rider policy, you can still save money by getting low cost insurance coverage and then adding GAP insurance for complete protection.
