Guaranteed Auto Protection
Purchasing or leasing a car can be an exciting experience, but with it comes the concern of protecting your new investment. Personal auto coverage alleviates this concern, but doesn’t cover all possible contingencies. For this reason, GAP coverage is important.
GAP stands for Guaranteed Auto Protection. This comes into effect when you have purchased or are leasing a car and owe a substantial amount on the vehicle. GAP insurance begins where your standard auto protection ends. For instance, say you have a $20,000 dollar car which is totaled in a car wreck and your personal auto coverage only provides for $15,000 dollars. In this event, you would still owe $5,000 dollars on the auto loan.
Using standard auto coverage, you would be liable for that $5,000 dollar difference. This is where GAP insurance comes into play. By purchasing a GAP plan, you would no longer be liable for the remaining amount on the auto loan. GAP insurance is particularly useful for a new or used auto with a large amount remaining on the auto loan. It is also particularly relevant regarding leasing. GAP insurance is typically required for all leased autos and is typically built into the lease agreement.
There is a word of caution involving GAP insurance. When your personal auto coverage already pays the amount the totaled car is worth, then the GAP plan will not pay you for the totaled car. GAP insurance only covers the cost of the total loss. There are a few other things to consider with GAP insurance.
As stated above, GAP insurance will only cover a loss on a totaled car. GAP insurance will not cover payment continuation if you lose your job or have suffered a disability due to a car accident. It will also not cover reimbursement for necessary repairs to your car. Rental car service in the event that you are left unable to drive your vehicle is also not covered. Lastly, GAP does not cover the difference in value which your vehicle will undergo following an accident. These are all things that standard auto coverage takes into account and will deal with.
If you find yourself upside-down in your car, meaning you owe more than it is worth, then GAP insurance is likely a good idea. In the event you placed a small down payment on a new vehicle and find yourself with a large loan, then GAP coverage is likely a useful tool for you. GAP coverage is not for everyone, but it is a powerful tool when employed correctly. If you have questions regarding Gap insurance, let Blue Sky Coverage help you find a policy that suitable for you. Call us today to get a quote.