What Is GAP Auto Insurance And Why Drivers Should Buy It?
October 25 2020 - 12:10PM
PR Newswire (US)
LOS ANGELES, Oct. 25, 2020 /PRNewswire-PRWeb/ -- Totaling
a recently-purchased car is an extremely unpleasant situation. The
insurance company will pay only the Actual Cash Value. Cars lose a
significant portion of their value as soon as they leave the lot.
The owner may be reimbursed with less than what they owe to the
lien holder. This is when GAP coverage will be useful. Car owners
should purchase GAP in the following scenarios:
- When financing a car that depreciates quickly. Most cars
depreciate fast, but some models lose value very rapidly. In some
cases, certain models can lose as much 75% of their value, after
their first three years on the road.
- After taking a long-term car loan. On a short-term loan, the
gap between what the driver owes for car and the actual cash value
will begin to narrow and disappear faster than on a long-term
loan.
- After putting a down-payment lower than 20%. In this case, the
buyer will owe to the lender, more than the car is worth. If the
car gets totaled or stolen, gap insurance will help pay the
difference.
- When leasing a vehicle. The lender will probably insist on
purchasing GAP insurance, alongside collision and comprehensive
coverage.
- When driving a lot. Cars with high mileage depreciate really
fast.
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SOURCE Compare-autoinsurance.org
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