If you have met with an accident and got your car damaged to a great extent, GAP insurance can save a lot of money. This insurance is also called ‘stolen or totaled insurance’. Many people are not sure if they should buy it or not. However, it can save a good amount of money at the time of need. It is a well known fact that accidents are sudden and unwelcome. Even if, nothing happens to you, the car repair may cost you dime, which you may not be able to pay. Before concluding anything, it is important to know what this insurance is all about and how it saves money for you.
What is GAP Insurance?
This insurance covers the difference between actual value of the vehicle at the time of accident and the amount that you owe for auto loan. In other words, it covers the loan amount of your car and the actual cash value of it. This type of insurance is always required because there is always a gap between what the car owner owes to the loan companies in the form of auto loan and the amount, which the car insurance company pays at the time of accident.
Reasons to buy GAP Insurance
It has been stated that this insurance saves a lot of money and hassles for the car owner if he has met with an accident. A few of other reasons are elaborated below:
New cars- You don’t need to buy this insurance if you are paying 20% of the down payment on buying a new car. However, if you are opting for 0% down payment, you should buy this policy. This is because, your car will depreciate a lot in the first year and you will not get the payoff value of your new car in an event of accident or theft.
Leased cars- The leasing companies may ask you to buy this insurance at the time of leasing the car. in case, the mileage is exceeded in the lease term, the vehicle will have a lower value at the time of ending the term. You can buy this insurance at any time during the lease term.
Used cars- if you feel that you have paid more for your used car, you should buy GAP insurance. A number of companies may give you the coverage if your car is less than 2 years old.
If you are planning to buy this insurance, it is highly recommended to do complete research about the companies offering it. The terms and conditions would also differ from one another. In order to get more benefits and maximum coverage, you can compare them with one another before deciding any insurance. It is good idea to check the reviews of the insurance companies online as various review sites rate these companies and provide honest feedback.
After buying the best insurance product from the reliable company, you will be able to stay stress free because you will have financial freedom now.