Gap insurance pays the difference in a total loss on your vehicle between what is owed and the car’s current value. Unfortunately, most times when you drive a car off the lot, it depreciates immediately. Most vehicles depreciate 20% or more in the first year.
Insurance companies are only on the hook for the current market value of your vehicle. What happens if you finance your car and the amount owed is greater than the car’s value? Who pays for the difference? You do.
The potential “gap” between what is owed, and your vehicle’s value is what gap insurance would pay. Purchasing gap insurance eliminates any potential short fall.
You can purchase gap insurance from your insurance agent or from the car dealership at the time of purchase. In most cases adding the coverage to your insurance policy is very minor.
If you aren’t financing your car there is no reason to purchase gap insurance. If you are financing your car and put down a small down payment or have long finance periods it’s generally a good idea to add gap insurance.
Your Friends In The Insurance Business at Midland's Ieuter Insurance Group can answer your insurance coverage questions.
For all your insurance needs, visit us at https://www.ieuter.com
Ieuter Insurance Group - 414 Townsend St Midland MI 48640
(989) 487-1758
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