Gap Auto Insurance, What Is It Really?

The world of auto insurance can be tricky and difficult to understand, leaving many in a bind after accidents happen on the road. While many individuals feel that they are fully covered in the case of an accident, a strong majority of them are not. A prime example of this common auto insurance issue can be seen when looking at new vehicles and the importance of Gap auto insurance.

So what is Gap Auto Insurance?

To better understand this type of insurance, we need to understand how insurance works as a whole. Different insurance levels cover different levels of accidents and damage. While some insurance levels only cover the damage for the other vehicles involved, full coverage insurance works to cover the damage that may be done to your vehicle. Contrary to popular belief, this coverage may not be enough.

New Vehicles

Gap auto insurance plays an important role for those who have just purchased a vehicle or are currently leasing a new vehicle. The insurance covers the issues that regular insurance, even full coverage, may not cover.

The issue comes in the form of car value. When you purchase a new vehicle, or lease a new vehicle, it automatically loses value. For a period of time, you will owe more on the vehicle than the vehicle is worth. If you purchase your vehicle for $30,000, and the value immediately drops to $25,000 once it is drive off of the lot, there is a gap between what the vehicle is worth and what you owe.

This gap only causes issues for individuals who get in serious car accidents or have serious car damage during that time period. When the accident or issue occurs, the auto insurance company will only cover what they believe the vehicle is worth. While you may have paid $30,000 for the vehicle and still owe $28,000 on that vehicle, it was only worth $25,000 at the time of the accident. Most insurance plans will only provide you with $25,000. That leaves a $3,000 gap between the money that you received for the car and the amount of money that you still owe for the vehicle.

What is Gap Auto Insurance?

Gap auto insurance has the sole purpose of covering that gap that you will inevitably have after purchasing a new vehicle or leasing a new vehicle. The only way for individuals to get around this issue is if they put up large down payments for their vehicles - something most fail to do.

Gap auto insurance works like any other type of insurance in that you pay a set fee for the coverage. If your vehicle is in an accident or suffers major damage, the insurance company will cover the difference between what you owe and what the vehicle was worth at the time of that damage.

If you are purchasing a new vehicle or leasing a new vehicle, talk to the professionals and get the numbers on your gap. Once you understand the worth of your vehicle after you drive it off of the lot and compare that to how much you owe, you will understand whether or not Gap auto insurance is right for your situation.

If you are looking for honest advice, prioritized repairs, options on repairs, maximized fuel economy, and a good feeling with who you are doing business with go to http://www.westsideautopros.com

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