If your down payment was less than 20%, you may owe more than your car is worth.
If your car is totaled or stolen, gap insurance can help you pay off the balance of the loan.
If you drive more than the average 15,000 miles annually, you can benefit from purchasing gap insurance.
Is Gap insurance worth buying?
If you’re financing a vehicle for a dollar amount that’s larger than what the vehicle is worth according to blue book standards, Gap insurance can be a good idea. However, if you’re financing the vehicle for less than the car is worth, gap insurance isn’t usually necessary.
How Does Gap Insurance work if your car is totaled?
Nearly a year later, your “new car” is totaled out. You file a collision claim with your insurer and find out that the actual cash value Opens a New Window. of your vehicle is only $19,200. This means after your $500 deductible is taken out, your car insurance company will pay out $18,700 to your lienholder.
Can Gap Insurance deny claim?
Denied Claims. If the worst happens and the insurance company denies your claim for damage to the car, gap coverage will not cover the outstanding loan amount, or the balance of the contract on a leased car. Some gap policies require you to have comprehensive and collision insurance in effect at all times.
Photo in the article by “President of Russia”