When most people consider buying a vehicle, they almost always consider the monthly cost of an auto insurance policy. In the State of Florida, if you purchase a vehicle from a dealership, you shouldn’t be allowed to leave until your insurance has been verified. In addition, when you register your vehicle’s tag at the county tax collector’s office, you must show proof of insurance to do so. Everyone is relatively aware of the requirements of liability insurance, but most people ponder, “What is GAP insurance?”. Like most types of insurance, GAP insurance may go unnoticed until the unfortunate event you need it.
GAP Insurance or Guaranteed Asset Protection Insurance offers the owner of the vehicle protection from the financial depreciation of the vehicle in the event the vehicle is totaled in an accident. The insurance covers the difference between the total balance owed to the lender and the vehicle’s actual cash value (ACV).
For example, if your loan balance on the vehicle is $30,000 at the time of an accident, the insurance company would have to appraise your vehicle and assign it an ACV, which was $27,000. The difference of $3,000 would either be paid by the GAP insurance policy or by the party named on the auto loan.
GAP Insurance – Actual Cash Value
GAP Insurance – Where to Get GAP
Beware of Imposters
Just as everything that glistens isn’t gold, everything that looks like GAP insurance isn’t actually GAP. Some companies offer a form of GAP, which can be called “automotive loss protection,” “lease payoff coverage,” “loan payoff coverage,” or “new car replacement.” Although these coverages may be similar to GAP, they fail to offer all of the benefits. To ensure the product you are purchasing is the best for your situation, you should always contact your insurance agent for a comprehensive and intuitive review.
GAP insurance is protection against the depreciation of your vehicle in relation to your loan balance. Since not all GAP is the same, you should always check with your trusted insurance agent for GAP insurance.
For more information about GAP insurance or automobile insurance, talk to the professionals at The Marcus Group.