Taking the step to buy or lease a new vehicle can make you want to pinch pennies afterward. But don’t be so quick to turn down GAP insurance when you signing all that paperwork.
What is GAP Insurance?
GAP insurance, or Guaranteed Auto Protection, is additional insurance coverage that covers your vehicle beyond your liability coverage. This insurance is offered for drivers who would like extra protection in the case of their new vehicle being totaled or stolen.
How Does GAP Insurance Work?
If your new vehicle is stolen or wrecked, GAP insurance will then send you a check for what a comparable used-vehicle would go for, or the ‘actual cash value’ of the vehicle.
Due to the depreciation of new vehicles, especially in the first few years, GAP insurance will cover any difference you may still owe to the dealer or lender after the fact.
So, Do I Need GAP?
GAP insurance is not needed for everyone, though it can help substantially for those who fall into these categories:
- The vehicle loan payoff period is 5 years or more
- Leasing the vehicle
- The vehicle purchased depreciates quickly
- The purchaser put down less than 20% when buying
Essentially, if you are still paying off your vehicle or leasing, GAP insurance is a great safety net to have.
Payne Insurance Group
If you’re thinking of purchasing a new vehicle, consider GAP insurance!
Payne Insurance Group provides insurance for auto, home, commercial, and much more! Payne Insurance Group has partnered with over 13 businesses across the Rio Grande Valley, As a result, we have created a one-stop-shop for all types of insurance!
