What Is Auto Gap Insurance?
Gap insurance is optional car insurance coverage that helps close the financial “gap” between the total amount you owe a lienholder and the settlement from your insurance company if your vehicle is deemed a total loss after a covered accident or incident.
If you financed or leased a vehicle, your lienholder might require gap coverage as part of your full coverage auto insurance. Contact McDonald Insurance Group in Littleton, Colorado, to learn more about this important type of auto insurance coverage.
Who Needs Gap Insurance?
Gap insurance isn’t right for every driver. If you own your car outright or it’s worth more than your loan or lease balance, this insurance may be unnecessary.
Gap coverage kicks in when your car is totaled and your insurance settlement isn’t enough to pay off your loan or lease. Without this coverage, you are responsible for covering the difference between your insurer’s settlement and the remaining debt.
Gap coverage can provide an inexpensive way to obtain crucial financial protection. It may be a good fit for you in the following circumstances:
- You purchased a brand-new car that depreciated quickly. Your car is now worth much less than your loan or lease balance.
- You financed a vehicle for more than 60 months, and it will likely depreciate faster than you can pay down the balance.
- You bought a new or slightly used car and made a down payment of less than 20%.
- Your vehicle depreciates faster than the average car.
How to Get Gap Insurance
If you purchase or lease your car from a dealership, you might be offered gap coverage when you sign the paperwork. You can also purchase gap insurance from your agent as part of your auto insurance coverage.
The agents at McDonald Insurance Group can help you determine whether gap coverage is appropriate for your situation. Contact us today to get a quote.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.