The Ultimate Guide to Gap Insurance

Posted at Mon, Jan 7, 2019 12:15 PM

If you lease a car or owe more on your loan than what your current ride is worth, the auto experts at Universal Car Superstore recommend you look into gap insurance. Don’t know a thing about it? Don’t worry, we’ve got you covered.

What Is Gap Insurance?

Gap insurance, which stands for guaranteed asset protection, is a type of insurance that protects you from financial loss in the event your vehicle has been declared a ‘total loss’ by a motor insurer. This may be due to an accident, theft, fire, or flood and happens when the insurance company ‘writes off’ your vehicle as a total loss and agrees to pay the insured the market value of the vehicle at the time.

This is where gap insurance comes to the rescue. It will cover the element of the financial loss suffered if your lease or loan is more than the vehicle is worth. Generally, a car will lose its value by 20 percent in the first year you own it, making it worth less than what you owe.

You may be a good candidate for gap insurance if

  • You put little to no down payment on your new car (generally under 20 percent)
  • You lease a vehicle
  • You financed for more than 60 months
  • Your car will depreciate at a faster rate than average
  • You rolled over negative equity into a new car

How Does It Work?

For gap insurance to work, you must have a motor insurance policy covering your car. If the vehicle is declared a total loss by your insurer and you’re paid the market value, you can claim the gap insurance for an element of the depreciation the vehicle suffered.

If you are buying one of our used cars for sale in Orlando, FL, it’s important to keep it, and yourself, protected. Consider gap insurance today. Contact our local car dealers as soon as today to learn more!

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