![]() ![]() Gap coverage adds another layer of protection and literally fills in coverage gaps. ![]() You have to layer different types of coverage, such as liability, comprehensive, and collision. Remember, even if you feel like you have enough car insurance coverage, insurance companies don't offer one "full-coverage" policy that covers every situation. You made a low down payment on your new car.Your loan has a high interest rate, which will make it take longer for you to pay off the principal versus how long it will take the car to depreciate.You buy a new car, and the loan has a length of more than five years.When Should You Buy Gap Insurance?īankrate recommends that you purchase gap insurance in the following situations: These details will determine how much you have to pay for gap insurance. Keep in mind that buying gap insurance from the bank or dealership is often more expensive than adding it to your full-coverage insurance policy.īankrate points out that if your insurance provider offers gap insurance, they'll factor in your car's actual cash value, your location, age, and auto insurance claim history. You can purchase gap coverage from your lending company or the dealership when you purchase your vehicle. For example, if your car is assessed at $16,000 but you still owe $20,000, your gap insurance will cover the $4000 difference.Īs Bankrate notes, gap insurance is an optional form of coverage. Simply put, gap insurance covers the "gap" between the amount you still owe to your auto lender and the actual cash value of your vehicle if it's totaled in an accident or stolen. ![]()
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