Gap Insurance 101
If you have both comprehensive and collision coverage with your auto insurance policy, you may think that you are covered from any peril. However, if you are leasing or financing a new car, you may not have enough protection. Investing in gap insurance can help to ensure that you have the right amount of protection while on the road.
If your leased car is totaled only a few months after driving it off the lot, chances are you still owe a lot to the finance company. Unfortunately, your auto insurance will only payout the actual cash value of your vehicle, which is probably less that what you owe. If you do not have a gap insurance policy, you would be left paying for the amount hat is not covered out of your own pocket, which can easily be a few thousands of dollars.
A gap insurance policy will cover the difference between what you still owe on your car and what your car insurance will pay for. When you finance a new car, there will most likely be a gap for a few years, which means you will be responsible for difference if your car is totaled. As you continue to make payments, the gap will close, so you can drop your gap insurance coverage.
It is important to keep in mind that you will only be able to use your gap insurance coverage if you have comprehensive and collision coverage as well. Make sure to look over your lease agreement and insurance declarations to see what type of coverage you need.
Contact the insurance professionals at The Schwab Agency in Colleyville, Texas for all of your auto insurance coverage needs. We will work with you to ensure that you have the right amount of protection, all at the right price.