by: Douglas W. Motz Insurance Agency
The moment you drive your car off the lot, it loses value, sometimes as much as 20-30%. GAP stands for Guaranteed Auto Protection insurance. Gap insurance covers the difference between the market value of what your car is worth and what you owe on the loan. If your vehicle has been totaled by an accident, vandalism, theft, flood, fire, tornado, or hurricane your insurance company typically pays the Actual Cash Value (ACV), which is usually less than the actual amount you still owe on your loan or the amount due for a lease payoff. It pays the difference between what is owed and what your auto insurance company will pay. Without GAP insurance you would owe the difference. Most people assume that if their car is totaled, it will be replaced at the amount they paid, or at least the amount they owe. This is not so.
If the ACV of your car is $15,000.00 and you owe $20,000.00, GAP insurance will cover the $5,000.00 difference, it may even cover your deductible.
GAP insurance is a must if you are buying or leasing a new car and should not be something that you decide to cut costs on. GAP insurance is very affordable. Dealerships tend to take a pretty hefty markup on add-ons like GAP insurance. Check with your insurance agent/company to see if they sell GAP insurance.
For further information on GAP coverage call Doug Motz @ Douglas Motz Insurance Agency at 760-200-0270 or go to DougMotz.com. Check out our blog @ www.DougMotzInsurance.blogspot.com or you can follow Doug Motz Insurance on Facebook, Twitter and Linkedin.
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