The second that you take your new car off the lot, the car begins to depreciate. Over time it will continue to lose value, gap coverage protects you if your loan amount is higher than the value of the car. Say you unfortunately get in an accident or there has been a theft. Your typical car insurance will only cover the current market value of your car. This is where Gap Coverage is necessary.
Understanding Gap Coverage
Gap coverage, or Guaranteed Asset Protection, is an add-on to your insurance policy that covers the "gap" between the market cash value of your vehicle and the outstanding balance on your auto loan at the time of the accident. Gap Coverage protects you and your financial future.
How Gap Coverage Works?
Lets say that you walk off the lot with a $40,000 car and you take out a loan of the same amount. A year later, the same car is involved in an accident in which the car is declared totaled. After 1 year your car has depreciated in value to a market price of $32,000, but your loan still has $36,000 outstanding. If you were to choose not to add gap coverage to your policy you would only be reimbursed $32,000 or the market value of your vehicle. This would leave you $4,000 in the hole. However, if you were to choose to add gap coverage, it would take care of the $4,000 difference.
At the AZ Insurance Team we will get the best available policy for you. We have been in business for over 10 years and know exactly the types of policies and add-ons that you need. Gap Coverage is not for everyone and we will never upsell you something you do not need. For anymore questions contact us at the AZ Insurance Team!
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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