What is Gap Insurance?
Gap insurance is optional, but sometimes necessary many occasions for auto insurance. It includes car insurance coverage that assists in paying off an auto loan if the vehicle is stolen or totaled, and the amount still owed is more than the vehicle’s depreciated value. This type of insurance is also known as “loan/lease gap coverage”. Gap insurance is also meant to use along with the comprehensive or collision coverage.
Determining Whether if It’s Worth It for You
Now that you know what gap insurance is, you may think that gap insurance is needed. It will ensure I am covered with no unpleasant surprise whatsoever. However, there are times when someone shouldn’t get gap insurance. The following includes when you shouldn’t get gap insurance:
- If your auto loan is under 60-months old.
- If you put more than a 20 percent down payment
- When the value of the car is less than you owe
- If you can afford to pay out-of-pocket the difference if the vehicle is totaled
Most of these reasons are self-explanatory, whether you should get gap insurance. However, it wouldn’t make sense to purchase gap insurance when you can pay the difference out-of-pocket because you will pay extra to get gap insurance along with the comprehensive/collision coverage. Why pay for extra if you can manage to pay out-of-pocket only if the vehicle gets stolen or totaled. Also, in many cases, an auto loan that is lower than 60-months old will be for a vehicle that is not more than what it is worth even though the vehicle depreciates quickly in the first year or so.
There are various factors that you need to consider determining whether you should get gap insurance. And thus, it will behoove you to consult an insurance company where you will be in good hands.
DeNooyer Direct Insurance Services LLC is the proven insurance company to turn to. Located in Albany, NY, DeNooyer Direct Insurance Services LLC includes highly trained, experienced staff who are more than happy to assist you in the right direction. And we at DeNooyer Direct Insurance Services LLC have been serving the Albany NY area for several years now. So, contact us today for a quote.