Understanding What GAP Coverage Is

Many policyholders often ask about GAP coverage. They want to know what it is and why they need it. Others are even required by their auto lender to carry it, but do not understand how if affects them. Here are a few things to know about GAP insurance.

What GAP Coverage Is

Short for Guaranteed Asset Protection, this type of coverage "bridges the gap" between the value of your vehicle and how much you owe should you have a total loss claim. This means that if your car is damaged beyond repair in an accident or is stolen, your insurance policy will pay above and beyond the value of the vehicle in order to pay off your loan. Many finance companies require this type of coverage to help protect both them and you in case of an incident.

Why You Should Consider Purchasing GAP Coverage

Even if it is not required by your lender, purchasing GAP coverage is a good idea for anyone with an auto loan. Vehicles often depreciate rapidly, especially if you purchased your car brand new. Today’s auto loans are generally much higher than the value of the vehicle and failure to have GAP coverage could put you in a serious situation if you have a major claim. Many policyholders without this type of coverage have incurred serious debt after a total loss incident as they still had to make loan payments on a vehicle that was no longer driveable.

Purchasing insurance is meant to be a protective mechanism for you and your family in case of an incident. GAP coverage is simply an added safety feature to help ensure your financial well-being if you ever experience a total loss claim.

For more information about auto insurance in Florida, please contact our local agents today.

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