Gap Insurance Coverage

GAP (Guaranteed Auto Insurance) is an insurance that will give the insurer a piece of mind. This is because a GAP insurance covers the difference between the worth of the car and the money you still owe on the car.  This insurance is especially important in cases where you are still paying for your car and it is stolen or damaged beyond repair or the car’s repair would cost more than its worth. 

Remember that unless you have paid in full the car you purchased, it technically and legally still belongs to the manufacturer or that bank which financed it.  Therefore, you are responsible for it if something happens to it.  Or simply, even if the car is stolen or is rendered unusable, you would still need to pay its amortization.  Therefore, so as not to make it hard on yourself and feel bad about paying monthly for something that is no longer existing or usable, then you would definitely want to get a GAP insurance policy.  As the name of this insurance suggests, it will pay for the “GAP” between the amount still unpaid to the leasing institution and the amount of the car if totaled or stolen.
For a more vivid illustration, let us take for example that you bought a car for £20,000. Payments are at £400 per month at an interest rate of 5%.  Then all of a sudden, the car was hit by a truck that lost its breaks and was totally wrecked.  You will of course be calling your regular car insurance company.  However, since time passed since the car was bought, the auto insurance decides that the price of the car at that time is only at £15,000 and will only be covering that amount.  This will make you face the fact that your car has already depreciated 25% and you will have to shell out £5,000 worth for the car.  This will not happen if you have a GAP insurance.  This insurance will be the one to cover the GAP, meaning it will be paying for the lacking £5,000 for repair or replacement of the vehicle.

When getting a car under a financing company, the latter usually requires the car buyer to get a GAP insurance aside from the regular auto insurance.  However, it is important that you check the coverage of your GAP insurance, as well as the auto insurance, and make sure that the car is well covered.  You may also want to check for the best quotes and rates for the insurance you will finally choose.

To get quotes, rates and various auto and GAP insurance coverage for reason of comparison, you may simply go online and visit websites that specialize on this.  These websites will lead you to the best offers there is and will make you get your money’s worth.  You may also opt to get the services of a reputable insurance broker who would be able to quickly and intelligently give you the best insurance companies where you can choose from.

This entry was posted on Saturday, July 4th, 2009 at 12:26 am and is filed under Gap Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.