A lot of car insurances focus majorly on losses resulting from accidents. But have you imagined getting a car by financing it? What would happen should you lose the car and you still have the loan to pay? This is worsened by the situation that the finance company over values the car when selling it to you and the insurance company will only pay you for the exact value of your car at the time of loss. This will leave a huge finance gap for you to settle. You will have to pay a lot of money for a car that you do not own and you do not have. GAP insurance is the cover that comes in to fill in that gap.
When Should You Get The Cover?
- If you are planning to acquire a car that has a very high rate of depreciation through financing as this will guard you against future losses.
- In the event that you have been financing the car for a long time, for instance 5 years, then you will enjoy more protection from this type of insurance.
- If you drive very long distances, the mileage of your vehicle is bound to increase. This implies that the rate of depreciation will be very high. Coupling with this car financing, then this type of insurance is essential.
Where And How To Get The Insurance
Generally, there are two places where one can get gap insurance. One of them is at the car dealers where you will get your car from. Another place is from the insurance companies that offer such a cover. However, it is recommended to get it from the insurance company because it is much cheaper as compared to getting it from the car dealership. To get one from the dealers, you will need to pay almost 4 times what the agents can offer you.
Financial Benefits Of The Cover
The insurance cover is only active until you are done paying the loan. After successfully completing the loan then you should get a refund since you no longer need the coverage. Some individuals may choose to resell the car before they complete paying the loan. So what happens in such a situation? You are still entitled to getting a refund. This refund should be done immediately the sale is done. Some of the dealers may take time to give the refund. Some of them will not give it unless you keep reminding them.
What Type Of Cars Are Eligible?
Whether you are planning to acquire a used car, a leased one or even the new cars then you need to get the cover. However, the following types and conditions deprive one from being eligible to this form of insurance. The first one is if you have outstanding leases and loan payments. If you install equipment on your car after it was bought. An extended warranty is also one of them. Therefore, before you settle on getting gap insurance to get your car, then you should have a full understanding of the factors above.