The Benefits of GAP Insurance: A Comprehensive Guide
Guaranteed Asset Protection, commonly known as GAP, is an essential addition to any vehicle that often goes overlooked. In this article, we cover what GAP insurance is, how it works, why it is important, and why if you own a car you need it.
Understanding Guaranteed Asset Protection Insurance
If you buy a car, for example, it will depreciate in price fast as soon as you drive it off the forecourt. If you crash or have it stolen, your auto insurance might not cover the balance still owed on a leased or financed vehicle. That’s where Guaranteed Asset Protection (GAP) insurance might come in handy.
GAP insurance keeps you from having to pay off a vehicle that you no longer have – either because it was totaled, stolen, or repossessed. It acts as your financial safety net, covering the difference in case of total loss or theft.
How Does Guaranteed Asset Protection Insurance Work?
Let’s be clear: the payment of GAP insurance is contingent on your losing something in order to get the benefit. For example, suppose you bought a new car for $30,000 and took out a loan to pay for it. After a year, the car’s value is $25,000. Then your new baby stroller pops out of your trunk and flies into oncoming traffic, totaling your car. Your auto insurance finds the actual cash value of your car is $25,000, but you have a loan coming due which you still owe $28,000 on. GAP insurance kicks in to cover the $3,000 in-between premium.
Benefits of Guaranteed Asset Protection Insurance
GAP insurance is essential because standard auto insurance often falls short of covering the actual amount you owe on the vehicle at the time of loss. Without GAP insurance, you could be stuck paying off a big loan or lease bill if your vehicle is damaged in an accident or stolen.
In conclusion, affordable Guaranteed Asset Protection (GAP) insurance is a coverage that provides you with the protection you need to prevent you from having to pay the difference yourself if your car is ever declared a total loss. Whether you purchase or lease a vehicle, every driver should look into purchasing GAP insurance as it could help you be prepared for any possible accidents that can occur on the road. Do not forget GAP insurance when buying or leasing your next vehicle because it will help save you both time and money later down the road.
