Gap insurance is an optional insurance coverage for newer cars that can be added to your collision insurance policy. It may pay the difference between the balance of a lease or loan due on a vehicle and what your insurance company pays if the car is considered a covered total loss.
Most cars lose 20 percent of their value within the first year. Standard auto insurance policies will cover the current market value of the vehicle at the time of a claim. When you finance a new car and only put down a small deposit, the vehicle’s ownership amount of the loan may exceed the market value of the car.
In the case of a car accident, in which the car is severely damaged, GAP insurance will help cover costs. GAP insurance covers the difference between what the vehicle is currently worth and the amount that you still owe.
when you may need gap insurance
It is a wise idea to evaluate purchasing GAP insurance for your vehicle if you:
- Less than a 20 percent down payment
- Financing for 60 months or longer
- Leasing a vehicle (generally required)
- A vehicle that depreciates faster than average
- Negative equity rolled over from an old car loan into the new loan
how we help
Benafica is able to help provide you with the expertise of our agents to get you the best coverage possible. We aim to provide more benefits to you outside of life insurance. Reach out to use today to get a comprehensive overview of your GAP insurance policies.