What to do if you’re in a car accident
March 16, 2018How well do you understand your Homeowner’s and Flood Insurance Policies?
July 24, 2018When 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
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.
- Some GAP policies even cover the deductible.
GAP Insurance – Actual Cash Value
- The actual cash value of a vehicle is a term that insurance companies use to figure how much the policy will pay out on a vehicle after it has been damaged. Determining the actual cash value of your vehicle can be relatively difficult, but a great place to start is Kelly Blue Book.
- Kelly Blue Book (KBB) is one of the most widely accepted valuation systems. KBB also offers valuation deductions for mileage and condition. However, the ACV provided by KBB may vary from the ACV used by your insurance policy.
GAP Insurance – Where to Get GAP
- One of the best and most cost-effective places to get GAP is from your local insurance agent. The Marcus Group offers GAP insurance that is regulated by the insurance industry, while the dealership’s GAP is not.
- As your insurance agent, we have been trained to answer all of your questions regarding GAP.
- When you are signing your closing documents, the dealership will have GAP insurance ready for you with the stroke of a pen. However, checking with your insurance company can save you a lot of money.
- Many people make the mistake of just signing up for GAP at the dealership, but their insurance policy already offers GAP coverage. Always check with your company to prevent paying for GAP insurance twice.
- While the dealership finances the cost of GAP insurance into the loan, the cost of GAP is significantly lower with your insurance company. When GAP is financed, it changes the total cost due to the accrued interest charges.
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.