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.