It is not the secret that most drivers think that gap insurance is just waste of money and needless expense, which is why they try to avoid it as much as possible. And they are right in most cases. However, the situation is rapidly changing in the problematic situations, such as total loss or even theft of your precious vehicle. If you have ever been in that situation, then you know how gap insurance is important and how it can make your life easier.
However, the main question here is what is the main difference between gap insurance and other types of vehicle protecting plans?
Let’s start from the beginning, from a dealer lot. You have decided to buy a new vehicle, but you don’t have enough money. What you are going to do? You have two options. You can use leasing plan or you can go to the bank and take credit. In both cases, you will owe certain money for your vehicle.
And it all looks nice, until one moment. Imagine that your car was stolen or ruined in a car accident. It’s not a big deal, some would say, our car insurance will cover all costs. But, this is the point where things start to get complicated.
Specificity of a gap insurance
Normal car insurance will pay you only the actual value of the car, not the amount you owe to the bank. This is a very important to understand. Every time you leave the dealer’s lot, your car loses its value. Only after a couple of months, it can worth 80% of its initial value. This is a big problem for people with ordinary car insurance (people who bought their vehicles on credit or leasing). Classic insurance plans pay only for the actual value of the car, not the amount that we owe to a bank. It is not hard to conclude that this “gap” between owed sum and actual value can be quite big.
And this gap can be filed with the gap insurance. This means that you will be protected in the situation of total accident or theft because insurance will pay this difference instead of you. As you can see, it is not waste of money, as we thought in the beginning.
Perfect candidates for a gap insurance
People are usually gets confused when it comes to different types of car insurance plans. It is not different in the case of gap insurance. Probably the first thing you have to understand about this specific type of security plan is that it is not needed to all drivers. You will not need it if you own your car 100% or if you have paid most of the debt. In these situations, you should apply for the ordinary plans. On the other hand, if you have a vehicle loan or you took your car on leasing, gap insurance should be your priority. The price depends on many factors, but we recommend you not to buy it from car dealers, because it is more expensive than in ordinary insurance firms.