Archív kategorií: Gap Insurance Cost
Any car, new or used, loses up to 25 per cent of its value immediately it leaves the yard or dealership.
If a car, purchased on credit or finance terms gets wrecked beyond repair, is totaled or gets stolen, the buyer will still be liable for making the car payments as usual.
If the car had comprehensive insurance cover, then the insurance cover would make payments for the car at its current market value.
The car dealer would be expecting the difference between the market price and the buying price, to be footed by the buyer. This amount is usually quite considerable, between 10,000 and 25,000 dollars. Footing this bill is not easy, especially if it is payments for a car that is stolen or wrecked beyond repair.
This is where gap insurance comes in handy.
Gap insurance covers the difference between the car purchase price and the car’s market value at the time it was totaled. In the state of California, auto insurance companies allow buyers to acquire gap insurance for vehicles up to eight years old, but not older.
This is good news as the car buyer can walk away from a car accident and not have to pay a cent for a totaled car, yet be able to negotiate a new loan for another car.
In the state of California, gap insurance is not mandatory and car buyers can get away without paying for this insurance cover. However, the roads and highways in California are not getting any safer and it is much better to have gap insurance than to not have it.
Gap insurance is refundable in California. However, this depends on a number of factors. If a car, purchased on credit or finance has gap insurance, it can be sold off to a third party and the initial owner cam then make a claim for the gap insurance that they paid.
It is important to note that documentation regarding the car sale, insurance and others, will be required to effect the refund. Refund based on a refinance option is not always guaranteed and will depend on the car dealer, car sale agreement as well as the terms of the Gap insurance. It is always important to clarify this fact early.
Whenever a person buys a car on credit, they need to purchase gap insurance as well. A car purchased from a dealer or other seller, loses value quite fast. After a car has been purchased on credit and the buyer is not yet the full owner, the car is at risk of theft, damage or other hazards.
If such a hazard were to occur to the car, the buyer would still be liable to pay the balance of the car payments. This is where gap insurance comes in. It protects the buyer from having to continue making repayments for the car after it has been stolen, written off or sold to another party.
If a person buys a car and then opts to sell it, the person will be entitled to a refund of their gap insurance. The insurance refund is not usually the full amount paid but part of the amount paid. This amount will depend on several factors. These factors include:
- the time period for loan repayment
- amount of loan that is still pending
- the odometer readings of the car
- few other documents
When selling a car purchased on credit, take it to a dealer. Once the car has been sold off, the dealer will inform the original owner. This information is documented and sent to the insurance company where thegap insurance was purchased. This information, together with documents indicating the sale of the vehicle, odometer readings and others are then processed by the insurance company.
Once the information and the request for a refund are processed, the insurance company will write a cheque for a certain amount, depending on several actors, to the original buyer of the car. The check will then be posted in the mail and the car owner will be able to cash it and recover their gap insurance money.
Gap insurance has several benefits to car buyers. Should a car purchased on credit get written off, the buyer will not have to continue making payments towards that car. Instead this cost will be transferred to the insurance provider.
Again, if the car gets stolen, vandalized or gets damaged such that it cannot be drive, the buyer will also not be expected to make any payments towards the car. Rather, the insurance will cover these costs.
Normal insurance companies and insurance brokers do provide gap insurance to auto buyers across the country.
If you have purchased a new or used car, you may have been soldGAP insurance. GAP insurance is usually purchased from a car dealership or auto insurance company. Purchasing GAP insurancefrom a dealership is the more expensive way to go.
If your auto insurance agent does not offer GAP insurance ask about loan payoff coverage. When purchasing a car from a dealership, your GAP insurance amount is usually calculated in with the loan amount.
If you purchase through an insurance agent, the GAP can usually be added to your current policy.
This will raise your insurance bill up $20-$30 per year. Before buying GAP insurance it is important to know what it covers.
If you are purchasing a brand new car, GAP insurance is the more beneficial add-on. GAP insurance covers the difference between the value of the car and what you owe on it. GAP insurance can be most beneficial if a car is totaled or stolen.
Let’s say your car is totaled and the insurance company will only pay $12,000, but you owe $18,000, GAP insurance would cover the $6,000 difference. If you owe more than the car is worth, GAP insurance is the way to go.
There may come a time that you would like a refund from GAP insurance. Your first step is to verify that you have purchased GAP insurance. If you sell or trade in your vehicle you are entitled to a refund. Tocalculate your refund, start by finding the insurance premium on your contract.
Next determine the length of the loan. Subtract the number of months remaining on the loan from the total length of loan.
For example, if you had a 30 month loan and you paid the vehicle off in 20 months, 10 is the number. Divide the premium by the lease term amount. This will tell you how much the insurance cost each month.
Multiply the premium amount by the amount of time left on the loan. This will tell you the refund owed. Before applying for a refund, check your policy. Some GAP insurance policies do not allow for a refund.
You do have to take into consideration that all policies vary, so it is advised to carefully evaluate the coverage that is being offered to you before purchasing Gap insurance.
When purchasing a new car, if the buyer pays a good down payment, chances are they will not need Gap.
What exactly is Gap insurance?
Basically Gap is the relative ratio difference between the actual value of a car and the amount owed, (the outstanding balance that is being paid out in payments). A vehicle is totaled when it is damaged beyond the total costs of repairs, and often times, those costs exceed the value of the car. This is when Gap insurance is required. GAP stands for; Guaranteed Auto Protection.
Did you know your vehicle depreciates the second you drive it off the dealer’s lot? That’s right! It’s amazing just how fast a car depreciates.
When purchasing a new car with an auto loan, in most cases you will need comprehensive/ collision coverage in addition to Gap insurance.
Why is that?
The comp and collision only offers the actual value of your car.
Where can you find Gap insurance?
Really, the best place to find it is through your car dealer. You can also find it online. Your dealer however, can fully explain the advantages and also exactly who requires it. Sadly a lot of car buyers are unaware of this insurance coverage and are thrown a curve when the dealer starts talking about it.
No matter how you look at it, car insurance is expensive. However, we all need it. You can be the best driver in the world, but is the other person?
The other people you are sharing the roads with are the ones you have to look out for. Often times people think a car accident won’t and can’t happen to them…yet you just never know what’s around the next corner.
You can have peace of mind with Gap!
The car could be stolen, wrecked in an accident and may be even damaged beyond repair. Cars also depreciate in value very fast, unlike real estate property, such as a house, which tends to appreciate in value.
If a car is purchased on credit, maybe through a finance program, buyers are encouraged and advised to purchase gap insurance. Gap insurance is insurance that covers a car buyer who still owes money on the car.
The gap insurance is meant to protect the car buyer in the event the car is totaled, stolen or can not be used any more.
Gap Insurance Providers
Gap insurance is usually provided by most major insurance companies. It is convenient to have this insurance as it offers the car buyer peace of mind, with the knowledge that they are covered in the event the car is totaled. Some dealers and car sales companies make this insurance a mandatory part of a car purchase, for those buying on credit.
Auto buyers who do not take out this loan will be forced to pay the difference between what they already paid for the car and the value of the car at the time of purchase.
Gap Insurance Benefits
The benefits of having gap insurance are plenty. The costs of the insurance are low, and are usually incorporated with the car payment. Gap insurance is also initiated when an automobile is leased out. This is good cover to both the car owner and the individual or company leasing the car.
Gap insurance does save money. Buyers of automobiles who have gap insurance can claim the insurance if they sell the car to another party. When a car buyer seeks to sell off a car that they purchased on credit, they will take it to a dealer who will sell it off. Once sold, the dealer will alert the car owner and then provide them sale documents.
These documents will be attached to a claims application which is then sent to the insurance company. Once the insurance company processes the application, the car buyer will receive a refund of part of the money they paid as gap insurance.
Gap insurance is an insurance product that is provided by insurance companies across the nation. It is an important auto insurance to own and offers protection and cover to a new car buyer.