Many residents of Charleston, SC don’t have gap insurance and they should! The team at B&A Insurance LLC is here to explain what gap insurance is and who needs it.
Gap insurance is an acronym for Guaranteed Auto Protection. The purpose of gap insurance is to reimburse the owner of a vehicle when the payment for a total loss is less then what the owner owes for the vehicle.
Gap coverage is not required insurance coverage, it is supplemental and not everyone needs gap insurance. Gap insurance coverage makes the most sense in these instances:
- Car owners who lease rather than own a vehicle
- Car owners who put no money down and choose an extended payoff period
- Car owners who are financing their vehicles
- Car owners who purchase vehicles that depreciate in value faster than others (for example, SUVs and luxury sedans)
Even if you need gap insurance when you purchase a vehicle, you don’t necessarily need to carry it for the life of your car loan or lease, once the value of your car matches what you owe, or you owe less than what the vehicle is worth, gap insurance is no longer a valuable insurance to carry.
Many lenders require borrowers to carry gap insurance on their vehicles and many dealerships will offer gap insurance at the time of purchase if you are buying a new car.
If you wreck your car, your insurance company will issue a check for the actual cash value of the vehicle which you can use to pay off the existing loan and put a down payment on a new vehicle with the remainder.
B&A Insurance LLC serving Charleston, SC can facilitate all of your Gap insurance needs, call us today!