Why is gap insurance option when purchasing insurance
Why is gap insurance option when purchasing insurance coverage for your vehicle?
It’s a terrible thing to lose your car in a fatal accident or for it to be stolen. But there are worse things: imagine if any of the two things mentioned happened and you still owe a lot of money for the car.
It’s really bad.
This is why you have GAP insurance.
GAP stands for Guaranteed Asset Protection. It covers the difference between what your insurance company pays you when the car is stolen or written off and the amount you bought the car. The difference between GAP and other insurance for your car is that the other insurance only pays you for the value of the car when it is stolen or written off
This is what makes GAP insurance stand out.
Which car is best for GAP insurance?
Cars lose their value very quickly. In case you don’t know, once you drive out your new car from your auto dealer shop, 11% of its value also walks away. That’s the lifecycle of new cars. Depending on the type of car, 15-25% of the car’s value also drops within the first five years.
Remember that GAP insurance takes care of the gap between the insurer’s payment and the amount you bought the car.
This is why GAP insurance is a good option for your new car.
For not so new cars, the value will be low although the depreciation rate will be slower than that of a new car. This means your insurer isn’t going to pay a good amount to you. The difference between the amount you bought the car and what the insurer pays will be low.
This doesn’t make GAP insurance the best option for older cars.
When you should or shouldn’t use GAP insurance.
It’s no longer news that GAP insurance is the best for your new car but it is possible there are some reasons why GAP insurance isn’t the best option for you even if you have a new car. Here are some factors to consider even if you have a new car
• If your initial deposit is less than 20% of what the car is worth, you shouldn’t go for GAP insurance.
• The brand of your car loses more value very quickly than a normal car will.
• You had a debt from the previous car and the debt is heavier on the car that is written off or stolen.
• If you can afford between the gap price that the GAP insurance takes care of.
How to get GAP insurance.
You can get your GAP insurance from your car dealer. Most times, it can be bargained for
If you are into car hiring or leasing have GAP insurance. If you run such an auto leasing business, you are already Gap covered. What you would need to do is to read the terms and conditions of leasing properly
You can speak with your car insurer. This is the best place to get your GAP insurance. You can make a deal on how to pay for it. If the amount might be too heavy all at once, your auto insurer can make a way for you to pay in installments.