Gap auto insurance is generally an endorsement to your auto policy; however, in some situations it may be a separate policy from your traditional auto insurance policy. It can only be added at the time the vehicle is purchased. The standard comprehensive and collision policies for your automobile only cover your auto’s “fair market value”. The “fair market value” of your automobile may be much less than what you paid for your vehicle from the moment you take ownership. Basically, gap insurance makes up the difference between what you owe against your vehicle and what it is worth according to your insurance company
Gap insurance is not necessary to maintain for the entire time you own your vehicle but for a limited time. Once the lien on your vehicle has been paid off or you owe less than the “fair market value” of your vehicle, it is no longer an advantage to carry gap insurance.
In the instance that you have a newer vehicle, which is financed, that is stolen or is involved in an accident gap insurance becomes significant. If you owe more than the insurance will cover you will be required to make up the difference owed to the bank, which could be thousands.
In most instances Gap insurance is very affordable, please call us to get more information and a quote for your gap insurance.