Know About GAP Insurance Coverage
With the prices of cars escalating with increasing tax and duties, it is important to make sure you are protected in the event of an accident. In many cases, your car insurance will not pay off your vehicle if it is totaled in an accident. That is why many lenders and dealers will offer you GAP Insurance to protect your investment and your credit rating.
GAPstands for Guaranteed Auto Protection. It protects you in the event of a total loss of your vehicle.
GAP will come in handy under the following circumstances:
1. If your vehicle is in an accident and is a total loss or is stolen and non-recoverable. This also includes natural calamities like flood, hurricanes, earthquakes et al.
2. Your car insurance will pay the actual cash value of the vehicle (what the vehicle is worth at that juncture and not what you owe). GAP will pay the remaining amount on the loan plus your insurance deductible.
GAP coverage is designed to protect your investment on a vehicle you are still making payments on. Since a vehicle begins depreciating as soon as you drive it off the dealership lot, GAP coverage is a way to assist in any unforeseen loss that you might not expect. Your car insurance company will only protect you for the ACV (actual cash value) of the vehicle. GAP coverage is designed to cover you for the difference between that amount and the amount you owe on the vehicle.