Before knowing what a Gap Car Insurance Coverage or in short Gap Coverage is, it is best to know what car insurance coverages are. Car insurance coverages are the things that determine on what kind of protection the insurance company will provide to its policy holders.
Car insurance coverages can provide insurance protection for a policy holder in various situations. It can be from accidents, which can include car insurance coverage for medical expenses for bodily injuries or repair expenses for property damage.
Other situations where a certain car insurance coverage provides theft, collision to other objects aside from cars, damage to property due to other factors aside from collision, fire, flood, other natural calamities, and other similar situations.
And after understanding what car insurance coverages are, then it is time to know a type of car insurance coverage which is a Gap Coverage or Gap Car Insurance Coverage.
What is Gap Coverage?
A Gap Coverage, or Gap Car Insurance Coverage, is a type of car insurance coverage that provides insurance protection to a policy holder, meaning a motorist having a car insurance policy, from paying ‘gap amount’.
A gap amount is the difference from the total original price of the car minus the insurance claims already received. It will insure a policy holder the whole amount of the original price of a car. In other words Gap coverage will insure a policy holder and pay for the gap amount, typically to the person or company that financed the loan for a car.
Gap Coverage or Gap insurance is categorized in two different forms. It can either be in a form of ‘waiver’ or in form of‘separate policy coverage’. A person can purchase a waiver of the gap amount directly from the company or institution that will finance the loan, which in turn will be the one who will purchase the gap insurance to cover the car. Or the person loaning will be the one to get or have Gap Coverage as a separate coverage in his/her existing car insurance policy.
The second form of gap coverage, which is to purchase an alternative or separate coverage, although it is allowed by the law, no existing car insurance company or insurers are currently making it available.
Gap Coverage is best for those who are taking no risks at all. These are people who make sure that everything they are paying for a well secured and covered.