Basic Benefits of Gap Insurance
Introduction:
Providing for the unfortunate events that befall us is one of the primary reasons we purchase insurance. One such event is your car being totaled in an accident or stolen and never recovered. In addition, if you have a loan or lease on your vehicle, you are still responsible for the balance, even after your insurance company pays its portion. This is where gap insurance comes into play.
Gap insurance is an additional loan option offered by auto insurance in Texas. It acts as a financial safeguard for vehicle owners who stand to lose money if their car is totaled or stolen. Gap insurance helps pay between the depreciated value of a vehicle (what your car is worth) and the amount still owed on the loan or lease.
There are ample reasons that justify the significance of having a gap insurance policy. Some of them are as follows:
Benefits of Gap Insurance:
It helps you save money:
The most crucial benefit of gap insurance is that it can help you save a lot of money. For example, if your car is totaled or stolen and you have an outstanding loan or lease, you will be responsible for the difference between the depreciated value of your car and the due balance. This difference can be several thousand dollars, which you would have to pay out of pocket if you don't have gap insurance.
It pays off your loan:
If you have a loan or lease on your vehicle, gap insurance can pay off the balance for you. This is especially beneficial if you are upside down on your loan, which means you owe more than the car is worth. For example, if your car is totaled, your insurance company will only pay the car's depreciated value, which may not be enough to pay off the loan. However, if you have gap insurance, the insurance company will pay off the entire loan.
It gives you peace of mind:
One of the best benefits of gap insurance is giving you peace of mind. If you are worried about being in an accident or having your car stolen and being stuck with a hefty bill, gap insurance can help put your mind at ease.
Drawbacks of Gap Insurance:
- The gap insurance coverage will only be available in the scenario when you are financing or leasing your car. If you are the outright owner of your vehicle, you would not need to get gap insurance.
- If your car is damaged but has not been declared a total loss by Texas homeowners insurance companies, then the gap insurance will not be helpful to you. It is only in the eventuality that your car is totaled that the gap insurance can come to your rescue and help you out.
Do You Need Gap Insurance if You Have Full Coverage?
Even when you have full auto insurance coverage, you will still need to get gap insurance. This is because in the event of any collision or any other situation in which your car is totaled, the full coverage policy will only pay you an amount that is equal to the value of your car at the time of the accident.
You might think that since you have a full coverage insurance policy, there would be no need for any further protection. However, this could not be farther from the truth because if your car is totaled, you would still need to pay any money you might owe on the vehicle.
This is where the gap insurance comes into play because it would help pay off any outstanding balance that you might have on the loan of your car, which will be above and beyond the actual value of your car. The full coverage insurance policies will not cover the extended warranties. They will only cover what is equivalent to your car's worth.
Hence, this is when gap insurance can come in handy. In short, the answer to the question "do you need gap insurance if you have full coverage?" is a resounding yes! Now get in touch with the insurance agent of McAllen, Odessa, Victoria and many other cities of Texas, and compare the auto insurance quotes available in the market to decide whether to buy only auto insurance, gap insurance, or both.
The bottom line:
You might have agreed that gap insurance coverage is a favorable option for those drivers who cannot afford to pay out-of-pocket for a totaled or stolen car. However, it is also beneficial in other ways.
After going through this entire article, we hope that you better understand gap insurance by knowing almost everything you need to know about this coverage. It is always a good deal to avail of financial aid in gap insurance, especially if you have leased or financed your car. Do proper research and then make an informed decision by consulting with your insurance provider to safeguard yourself from any financial crisis.