TUESDAY, MARCH 29, 2016
Actually there are two questions that should be asked:
1. Do I need GAP Insurance
2. Where should I buy GAP Insurance?
GAP insurance covers the difference (the GAP) between the car's Actual Cash Value (often referred to as book value) and how much you owe on a car of your car is totaled. If you owe more on the car than the Actual Cash Value of the car at the time it is totaled in an accident you will end up owing money to the lender even after the insurance company pays your for the total on your car. This situation, also known as being upside down, happens more and more often particularly as auto loan terms go as long as 6-7 years and often allow you to put no money down. If you have a loan longer than 3 years on your car and you didn't put much money down then there's a very good chance you need GAP insurance.
Now, where should you buy GAP Insurance? Most dealers will try and talk you into buying GAP coverage from them if you take out a loan on a car, period. Dealers will usually charge you between $600 - $900 for GAP coverage however in most cases you can add GAP coverage to your auto policy for around $25-$30 per year per vehicle. Simple math will tell you that on a six year loan you're looking at around $150 total cost for GAP Insurance buy adding it to your auto policy versus at least $600-$900 to buy it from the dealer. It should be a pretty simple decision although the dealers will try every trick in the book to get you to buy it from them because that's a profit center for them, it's an extra value added coverage for us.
Please contact us if you have any questions on GAP insurance or any other coverage.