What Is GAP Insurance?
by admin on 22/12/11 at 9:07 pm
A basic car insurance can protect you against financial risks in the event of an accident, a natural disaster, or a loss. Should anything happen to your car, the insurance company will provide the necessary coverage as well as protect you against third-party liabilities. However, the standard car insurance policy may not be enough, mainly when you are insuring a new car bought using an auto loan. This is where GAP insurance comes in.
A GAP insurance is specifically designed to provide an additional coverage for cars financed using an auto loan. Most auto loans available today adds interest and other charges on top of the initial car price. With the basic car insurance covering only the cash value of your car at the time you file for an insurance claim, the coverage may not be sufficient to cope with the remaining balance of the auto loan.
What is GAP insurance and what does it do? GAP insurance coverage is the coverage that will save you from the difference in value. When you file for an insurance claim due to a total loss, for example, you don’t have to worry about not being able to repay the auto loan in full because the GAP insurance will bridge the gap between the basic car insurance coverage and the auto loan’s principal amount.
