A vehicle becomes a depreciating item over time as age and miles reduce its worth. Because of this, car insurance companies provide a fair market value of a vehicle if it’s totaled due to an accident. If you owe more than what the car is worth, you could have to pay this difference back to the lender unless you have guaranteed asset protection (gap) insurance.
This guide will better help you understand when you could need it and what gap insurance costs.
What is gap insurance?
Gap insurance is optional add-on car insurance coverage that covers the “gap” between the amount owed on a vehicle and its actual cash value (ACV) in the event it is totaled, destroyed or stolen.
If you’re planning on leasing or buying a car or have already done so, you may be wondering if you should buy gap insurance or possibly where to buy gap insurance. The answer is, it depends.
Gap insurance is always an optional purchase. In some states though, a car dealer must offer gap insurance at the point of purchase.
Imagine you’ve been involved in an accident and your car has been damaged beyond repair and must be replaced. You still owe $18,000 on your car loan but the vehicle is now worth…
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