Accidents occur on a daily basis, and whether they are minor or catastrophic, it can be beneficial for drivers to have insurance plans in place. In fact, for some people, the assistance they receive through an insurance claim may be essential for them to stay afloat.
Along with regular insurance, some supplemental products can be very beneficial. A gap insurance plan is one of those products, and for those considering it, there are a few important facts to know.
How it works
Guaranteed auto protection, or gap insurance, stands true to its name. This insurance helps to fill in the gap between the amount a person owes to the lender and the actual value of the insured car. After an accident, a policy that fulfills the basic car insurance requirements may leave drivers in quite a bit of debt, especially if the car is totaled. The same is true in cases where someone steals the vehicle.
Who it is for
A gap insurance policy can be most beneficial to those who owe quite a bit of money to a lender. This is particularly true for those who do not put down a large down payment, or borrowers with extended payment plans. The gap plan can really help to bridge the gap between what they have paid and what they still owe.
What Is not covered
It is critical that policyholders understand the different situations that a gap policy does not cover. Some uncovered instances include:
- Extended warranties
- Car payments due to hardship
- Car repairs or rentals during repair
- New down payments
It is also important to understand the stipulations of the policy in certain situations. For example, policyholders who trade in their vehicles for new ones must obtain new gap policies; however, they do receive a refund for any part of the policy they did not use.
This is a brief overview of a few key facts about gap insurance policies. If you are thinking about a policy, take time to review the available options and consult with a professional to help you in selecting the best choice.