Is gap coverage right for you? Guaranteed asset protection helps you transfer the financial risk if you owe more for your vehicle than it's worth.
Guaranteed asset protection, or gap insurance, is an optional automobile coverage that helps you transfer the financial risk if you are involved in an auto accident and you owe more for your vehicle than the amount that it's worth. This is referred to as being "upside-down."
Since a new car's value drops significantly the minute it's driven off the lot, if you are involved in an accident that totals your vehicle in the first few years, you may find yourself owing the finance company more than the vehicle's actual value. Gap insurance provides for the "gap" between the two amounts.
If you took advantage of a zero percent down payment deal or put a small amount down, or stretched the life of your loan past 3 years, gap insurance is most likely a good idea. The vehicle typically depreciates considerably faster than you pay down the loan.
Gap insurance is typically not available for used vehicles. To cover your risk, it's wise to put down an ample down payment and finance for the shortest possible timeframe.
For those who lease, gap insurance is considered essential because typically there is no trade-in and little cash put down. If the car is a total loss, you will owe the difference between what you have paid and the balance of the lease.
Depending on your vehicle's make, model and loan terms, we can help you determine if gap insurance is the right choice. Contact Insurance Plus LLC at (573)-615-0291 to learn how gap insurance can complement your auto policy coverage.
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