Buying a new vehicle is an expensive investment that often requires financing. However, it’s important to remember that you will still need to pay the remaining loan amount if your vehicle is ever stolen or totaled. One way to prepare for such a scenario is to purchase guaranteed asset protection (gap) coverage.
What is Gap Insurance Coverage?
Gap insurance is an optional coverage that will cover the remaining amount owed on your vehicle and the actual cash value (ACV) if it is destroyed, totaled, or stolen. For example, if you still owe $20,000 on your auto loan, but the vehicle is worth only $17,000, the gap insurance will cover the $3,000 difference between its current market value and the amount you owe after you meet the deductible.
Typically, gap insurance only applies to new vehicles or models that are less than a year old that have either been stolen or totaled. This coverage doesn’t include damages, accidents, or repairs for a vehicle. You also won’t be able to use any of this money to purchase another vehicle, as that requires new car replacement coverage. Reaching out to your insurance agency is helpful if you have any questions about your policy.
How Much Does Gap Insurance Cost?
The cost for gap coverage tends to depend on where you purchase it. You can either get this coverage at a car dealership or with your auto insurance provider. Gap coverage is usually much more expensive if you buy it from the dealership compared to adding it to your auto insurance policy. For example, the cost of gap insurance from a dealership can usually range from $400 to $700, while it only costs between $20 to $40 per year if added to your car insurance policy.
Choosing to buy gap coverage from your car insurance provider is a much better investment that can result in significant cost savings. Of course, several factors may impact the cost of gap insurance, such as your vehicle’s actual cash value (ACV), your insurance claims history, age, and your location. Discussing these details with your auto insurance provider is important in understanding the cost of gap coverage to determine if it’s the right coverage to meet your needs.
Is Gap Insurance Worth the Cost?
Gap insurance is often recommended for a new vehicle if the auto loan is five years or longer. Getting this coverage is also important if the loan has a high-interest rate or if you paid a low down payment. It’s also important to remember that your “gap cost” is constantly fluctuating, as the difference between what you owe and the worth of your vehicle tends to shrink as you make more payments and as the vehicle depreciates.
Tips on Lowering the Cost of Gap Insurance
Looking at ways to reduce the cost of your insurance is always a priority. Purchasing gap coverage through a dealership isn’t usually recommended due to it being too expensive. Shopping around with several insurance providers is the best option for finding the right amount of coverage to meet your needs while not going over your budget. An insurance agency can work with you in comparing multiple insurance providers, which saves you a lot of time and energy.
How Soon Can You Receive Payment for Gap Insurance?
The payout for gap insurance can range anywhere from as little as five days to several weeks. Typically, an insurance company can take up to 30 days before declaring a vehicle a total loss, and sometimes this process can take longer. Staying in touch with your insurance provider is helpful in gaining a better understanding of the timeline for the entire process.
Reach Out to Wellcovered Insurance to Learn More About Car Insurance
Wellcovered Insurance works with a wide range of insurance carriers to help you find the best car insurance coverage to meet your needs. We offer a wide range of insurance options, such as home, condo, rental property, RV, boat, car insurance, and much more.
Our team is always available to answer your insurance questions as we return all of our phone calls on the same business day. You can easily receive an auto quote in 15 minutes, and it only takes one or two business days for house insurance quotes.
Providing the best service is our priority, as we are one of the top-rated insurance agencies on Google Reviews. We maintain an active presence in Volusia and Seminole Counties, as we are a member of the DeLand Breakfast Rotary and also the West Volusia Regional Chamber of Commerce.
Give Wellcovered Insurance a phone call today to schedule a free consultation to learn more about all of your car insurance options!
