Because of the potential savings and the low overall cost of Gap insurance, many car buyers and insurers recommend purchasing Gap insurance. Learn more about what Gap insurance protection is and if it’s worth the extra cost for your budget.
Gap insurance covers the difference between what a person owes on a vehicle and the vehicle’s real cash value in the case of an accident, resulting in it being declared a total loss, it is only available as part of an auto loan or as a stand-alone product through an insurer, dealer or agent.
Gap insurance may also be referred to as Gap Protection and GAP protection. It is very important for vehicle owners who do not have their vehicles fully paid off and therefore need Gap Insurance.
Yes, even though you can buy Gap from MPI on new and one year old vehicles, dealerships offer it for vehicles that are older than this.
Let’s say at the time your new car is stolen, it’s worth $25,000 and you have a $30,000 loan. You have comprehensive insurance, which will pay for the value of your car at the time of theft, but you first have to pay a $500 deductible. You receive $24,500 from your insurance company but still owe $5,500 on your loan.
Gap insurance is designed to pay that final $5,500 so you don’t owe money on a totaled car. Without gap insurance, you’ll have to cover the balance on your loan plus the cost of a new vehicle.
To summarize, Gap insurance can be exactly what you need in the moment that you need the most, and help get into a new vehicle as soon as possible after an accident. Be safe and protect your property and family with a proper insurance.