Why You Need GAP Insurance
When you’re in the financing office getting ready to buy a new car or truck, you may be asked about various add-ons. Do you want an extended warranty? How about a paint protection package? Would you like a security package? Would you like to consider GAP insurance?
Of those, GAP insurance will likely be the most beneficial. But what exactly is this insurance and what does it cover?
You might think it’s called GAP insurance because it fills in the gaps in terms of loss of value your vehicle suffers once it’s driven off the car dealership lot. However, GAP is actually an acronym that stands for guaranteed asset protection. Vehicles depreciate in value very quickly. In fact, the minute you drive your vehicle off the lot, it loses 11% of its value. So if you paid $50,000 for your vehicle, it’s now worth less than $45,000. By the end of the first year, your vehicle will lose 20% of its value.
GAP insurance covers the difference between the amount you paid and the actual value of your vehicle. That could be a difference of possibly tens of thousands of dollars, which is why this insurance is important to have in the event of a car accident. If your car is totaled, you still have to pay off the loan. However, if you have GAP insurance, you are fully covered financially. You’ll just have to pay the deductible. It’s one less thing you’ll have to worry about after dealing with a stressful car crash.
GAP insurance is required for leased vehicles, but not new purchases. However, it is recommended that you purchase this protection, even though it will increase your monthly payment.
Should you get GAP insurance for your new vehicle? It’s recommended for all new vehicles, especially in the following circumstances:
- Your down payment is less than 20% of the vehicle purchase price.
- You are financing the vehicle for 60 months for longer.
- You are buying a car that depreciates quickly, like a family car, compact vehicle or any vehicle under $15,000.
The cost of GAP insurance varies by dealer and location, but expect to pay $200-$700. You can purchase it at the dealer and just add it to your monthly payment. You can also purchase it later through your auto insurance company, but you may be required to pay the total amount up front in full.
GAP insurance gives drivers peace of mind. Even the most cautious driver can get into an accident. Some drivers get into major accidents just days or weeks after driving their new cars off the lot.
Contact a Personal Injury Lawyer
What types of auto insurance do you have? What benefits do they offer in the event of an accident?
The Houston auto accident lawyers at The West Law Office, PLLC can assess your situation and make sure you get all the compensation that is available to you after a car accident. Schedule a consultation today to learn more. Give us a call at 281-347-3247 or fill out the online form.