How Does Gap Insurance Work?

​If you’re on the road almost every day, commuting to work or school, it’s best to be financially covered. Aside from your current liability and collision coverage, there’s another called gap insurance.

Guaranteed auto protection (GAP) will reimburse if the vehicle is in total loss and the cost is less than the active balance from the lease. You may wonder, how does gap insurance work? Continue reading to know how.

What is gap insurance for vehicles?
The GAP is a supplemental policy that insures the amount of the vehicle during its signing for the policy and the active loan or lease amount. For example, your car gets into an accident, resulting in a total loss; the gap insurance will reimburse that amount. In addition, some autos may require gap insurance like specific types of cars, SUVs, and trucks.

Car Gap Insurance Example
When filing for claims and vehicle valuations, there must be equity. The value must not be a price you have to pay but what your insurer will pay once the car is in ruins. In this case, your insurance provider will pay for the actual cash value of your auto. 

For example, you’ve purchased a brand-new car with a price of $30,000 and paid a downpayment of 10%. The car’s cost will be brought down to $27, 0000 and you have a five-year loan for it. Unfortunately, your car was wrecked after a year and was declared by your insurer as a total loss. Your insurance provider will check if you owe a full current value for the vehicle.

Pros of Car Gap
If there’s a gap between the car’s outstanding loan balance and its worth when used, the guaranteed auto protection will cover the difference. This event is likely to happen in the first years of the car. 

Final Words
Securing your vehicle can give you peace of mind. With this, gap insurance is the best supplemental option. In addition, you have to check with your insurance provider for the types of cars that will require you to have gap insurance.

At Best Insurance Group, LLC, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (970) 674-5000. Get your free quote today by CLICKING HERE. Coverage discussed in this article is not guaranteed. Please contact our agency to go over your existing coverage. We are happy to help you make sure your needs are being met!