Contact Us: ​(203) 706-4015
American Financial Solutions LLC
  • Home
  • Quotes
    • Auto Quotes >
      • Auto Insurance Quote
      • Motorcycle Quote
      • ATV Insurance Quote
      • Classic Car Insurance Quote
      • RV Insurance Quote
    • Property Quotes >
      • Home Insurance Quote
      • Flood Insurance Quote
      • Landlords Insurance Quote
      • Renters Insurance Quote
    • Business Quotes >
      • Business Insurance Quote
      • Insurance Bond Quote
      • Workers Compensation Quote
    • Life & Financial Quotes >
      • Life Insurance Quote
      • Disability Insurance Quote
      • Final Expense Insurance Quote
    • Other Quotes >
      • Instant Insurance Quote
      • Boat Insurance Quote
      • Event Insurance Quote
      • Umbrella Insurance Quote
      • Life Insurance Quote - No Rate
      • Home Insurance Quote -No rate
      • Auto Insurance Quote - No Rate
  • Service
    • Report a Claim
    • Make a Payment
    • Update Contact Info
    • Policy Changes
    • Proof of Insurance
    • Priority Review
    • Contact My Carrier
    • Online Documents
  • Insurance
    • Vehicles >
      • Auto Insurance
      • Motorcycle Insurance
      • ATV Insurance
      • Boat Insurance
      • Classic Car Insurance
      • Roadside Assistance
      • RV Insurance
    • Property >
      • Home Insurance
      • Flood Insurance
      • Landlords Insurance
      • Renters Insurance
    • Business >
      • Business Insurance
      • Business Owners Package (BOP) Insurance
      • Insurance Bonds
      • Workers Compensation
    • Life/Financial >
      • Life Insurance
      • Disability Insurance
      • Final Expense Insurance
      • Umbrella Insurance
    • Other >
      • Event Insurance
  • Blog
  • About
    • Staff Directory
    • Client Testimonials
    • Insurance Articles
    • Refer a Friend
    • Insurance Carriers
    • Agency Photo Gallery
    • News
    • Videos
    • Rewards
    • Contact
  • Taxes Preparation
  • Home
  • Quotes
    • Auto Quotes >
      • Auto Insurance Quote
      • Motorcycle Quote
      • ATV Insurance Quote
      • Classic Car Insurance Quote
      • RV Insurance Quote
    • Property Quotes >
      • Home Insurance Quote
      • Flood Insurance Quote
      • Landlords Insurance Quote
      • Renters Insurance Quote
    • Business Quotes >
      • Business Insurance Quote
      • Insurance Bond Quote
      • Workers Compensation Quote
    • Life & Financial Quotes >
      • Life Insurance Quote
      • Disability Insurance Quote
      • Final Expense Insurance Quote
    • Other Quotes >
      • Instant Insurance Quote
      • Boat Insurance Quote
      • Event Insurance Quote
      • Umbrella Insurance Quote
      • Life Insurance Quote - No Rate
      • Home Insurance Quote -No rate
      • Auto Insurance Quote - No Rate
  • Service
    • Report a Claim
    • Make a Payment
    • Update Contact Info
    • Policy Changes
    • Proof of Insurance
    • Priority Review
    • Contact My Carrier
    • Online Documents
  • Insurance
    • Vehicles >
      • Auto Insurance
      • Motorcycle Insurance
      • ATV Insurance
      • Boat Insurance
      • Classic Car Insurance
      • Roadside Assistance
      • RV Insurance
    • Property >
      • Home Insurance
      • Flood Insurance
      • Landlords Insurance
      • Renters Insurance
    • Business >
      • Business Insurance
      • Business Owners Package (BOP) Insurance
      • Insurance Bonds
      • Workers Compensation
    • Life/Financial >
      • Life Insurance
      • Disability Insurance
      • Final Expense Insurance
      • Umbrella Insurance
    • Other >
      • Event Insurance
  • Blog
  • About
    • Staff Directory
    • Client Testimonials
    • Insurance Articles
    • Refer a Friend
    • Insurance Carriers
    • Agency Photo Gallery
    • News
    • Videos
    • Rewards
    • Contact
  • Taxes Preparation

American Financial Solutions LLC Blog

Get A Free Quote

What is gap insurance?

1/26/2021

0 Comments

 
Picture
Gap insurance (also known as loan/lease payoff) is an optional auto insurance coverage that applies if your car is stolen or deemed a total loss. When your loan amount is more than your vehicle is worth, gap insurance coverage pays the difference. For example, if you owe $25,000 on your loan and your car is only worth $20,000, your policy's loan/lease payoff coverage covers the $5,000 gap, minus your deductible.
Picture

​How gap insurance works?

When you buy or lease a new car, the vehicle starts to depreciate in value the moment it leaves the car lot. In fact, most cars lose 20 percent of their value within a year.

​If, when you finance the purchase of a new car and put down only a small deposit, in the early years of the vehicle's ownership the amount of the loan may exceed the market value of the vehicle itself.

​In the event of an accident in which you've badly damaged or totaled your car, gap insurance covers the difference between what a vehicle is currently worth (which your standard insurance will pay) and the amount you actually owe on it.
Picture

​Do I need GAP insurance?

If you’re in one of the following situations, you might want to consider GAP insurance:
  • You made a small down payment — or no down payment at all: If you didn’t make a substantial down payment, there’s a chance you were upside down soon after you left the car lot. New cars depreciate quickly — they can lose 25% or more of their value in the first year alone.
  • You chose a long loan term: When you spread your car loan payments over a long period of time, it also takes longer to build up equity. If you financed your car for 60 months or longer, you may want to consider GAP insurance.
  • Your car makes and model depreciates quickly: Some cars depreciate more quickly than others. If you’re buying one of those vehicles, buying a GAP insurance policy could be a smart move.
  • You plan to put a lot of miles on your car: The faster you put miles on your car, the faster it will depreciate. The average American motorist drives 13,476 miles per year, according to March 2018 data from the U.S. Department of Transportation’s Federal Highway Administration. If you think you’ll put a lot of miles on your car each year, the resulting increase in annual depreciation may make GAP insurance a good decision.
  • You’re leasing the car: GAP insurance may be required if you’re leasing. It’s often included in your lease agreement — in some cases, it’s included for free and in others, it’s an optional feature you can buy for an added charge

Keep in mind that if you buy a GAP insurance policy, you don’t need to keep it forever. If it’s optional, you should be able to cancel your GAP insurance policy.

How do I get GAP insurance?

GAP insurance is typically purchased at the time you buy comprehensive and collision coverage, though you might be able to get coverage after you buy a vehicle. But some insurers have requirements to purchase GAP insurance, like the car needing to be no more than two or three model years old.

Most auto insurance companies sell GAP insurance, and there’s a good chance that your car dealership does, too. But GAP insurance through a dealer is typically more expensive.

How does gap insurance work if your car is totaled?

Gap insurance only fills the gap between the actual cash value of a car at the time of a claim and the current amount still owed on a car loan. The specific gap policy covers, for instance, $4,000 on a vehicle assessed at $16,000, but with $20,000 still to be paid on the loan. Total loss can vary by state law and/or by the insurance provider.
Picture

How long does gap insurance last?

Once you add gap insurance, it applies for the duration of your policy. However, you won't need gap coverage for the entire length of the loan. Once you owe less than what the car is worth, you can drop the insurance.
Picture

Do I need gap insurance if I have full coverage?

While you might feel like your auto insurance coverage is robust, auto insurers don’t offer any one policy called “full coverage” that’s designed to protect you against every possibility. Instead, you get more protection by layering different types of coverage (e.g., liability, collision, comprehensive) together. Adding gap insurance to your existing coverages can be an excellent way to fill out your protection on and off the road, getting you closer to the ideal of full coverage.

References:
https://www.bankrate.com/insurance/car/gap-insurance/
https://www.gocompare.com/car-insurance/gap-insurance/
https://www.moneysupermarket.com/car-insurance/gap-insurance/
https://www.nerdwallet.com/blog/insurance/car-insurance-basics/is-gap-
insurance-worth-it/

https://www.nationwide.com/personal/insurance/auto/coverages/types/gap
0 Comments



Leave a Reply.

    Contact Us

    (203) 706-4015​
    48 Meriden RD
    Waterbury, CT 06705​
    Click Here to Email Us

    Get A Quote

    Archives

    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    July 2019
    May 2019
    April 2019
    March 2019

    Categories

    All
    Actual Cash Value
    Auto
    Auto Insurance Companies
    Car Insurance
    Car Insurance Claim Valuation Process
    Car Insurance Companies
    Car Valuation During A Claim
    Christmas
    Common Insurance Questions
    Comprehensive Coverage
    Connecticut Insurance
    Coronavirus Pandemic
    FAQs
    Financial
    Full Coverage
    Gap Insurance
    Health Insurance
    Home-based Business
    Homeowners Insurance
    Homeowner’s Insurance Agent
    Homeowner’s Insurance Policy
    Insurance
    Leasing Car
    Local
    Low Cost Automobile Insurance
    Miles Of Car
    Most Common Insurance Claims
    Personal Accident
    Personal Property Insurance
    Replacement Cost
    Safety
    Savings
    Second Stimulus Check
    Stimulus Bill
    Types Of Coverage
    Uninsured Car
    Water Damage
    Workers’ Compensation Insurance

    RSS Feed

    Get A Quote

Navigation

Homepage
Insurance Quotes
Policy Service
Insurance Products
Contact Us
Agent Login

Connect With Us

Share This Page

Contact Us

American Financial Solutions LLC
​48 Meriden RD
Waterbury, CT 06705
(203) 706-4015​
Click Here to Email Us
Review Us

Location

I-84 western approach to Waterbury, CT​ photo by Daniel Case | CC-BY-SA-3.0 | Website by InsuranceSplash