Gap Car Insurance provides coverage against the difference between the market value of car and loan amount. But aren’t the two same that’s what you might be asking yourself. For example, if you buy a car at $25,000. As soon as the car gets out of the showroom it’s cost gets depreciated by almost 20%., so now your car worth is about $20,000.Now in case, you met with an accident and you do have the full coverage including comprehensive and collusive coverage you will still get coverage on the present market value of the car and that is $20,000. So what gap car insurance is doing is that it’s covering the $5,000 difference.
There are different kinds of gap car insurance policies available in the market. Some provide covers in case of theft, losses and some don’t so try to find what is exactly covered in the policy. Getting gap insurance is a good idea if you are buying a new car and if you think that you can’t cover the difference between the market value of the car and the loan amount. Also remember that older cars are not covered under it, in most cases.
Although getting a gap car insurance is not necessary, but think it could help you in case your car gets damaged in an accident or even in case of theft shortly after the purchase.
It is important to know that if you are buying your car from a dealership and decide not to take gap car insurance at the time of purchase of the car along with regular car insurance then you might have to pay a higher price for it later on.
Before buying a gap car insurance check whether this insurance is contained in the existing policy. You never now that it might be present there and then you do not have to buy it separately. If it is not included then just give it a thought that whether you really want to get it or not.