What is GAP Insurance?
GAP insurance is a type of coverage that protects you from taking a loss if you get into an accident shortly after purchasing a new car or taking delivery of a leased vehicle.
Florida car insurance normally covers the cash value of a vehicle as spelled out in your insurance policy. If you buy a new car, drive it off the lot and get into an accident, there could be a difference in the amount you owe on the loan and the amount of your car insurance settlement.
Why is this? Because cars lose value the moment you drive them away from the dealership. Your Florida car insurance doesn’t cover the amount of the loan you took out to buy the car, it covers the retail cash value of the vehicle. Some sources say a new car drops in value as much as 30% –just for driving it off the dealer lot.
That’s where GAP insurance comes in. With GAP insurance you are covered for the difference between the cash value of the car and the amount left outstanding on a new car loan or car lease.
In some states, GAP insurance is more important because of elevated risk. People who live in high traffic areas should consider themselves at a greater risk of an accident, even if they are careful drivers with clean driving records.
Florida GAP insurance may be a wise choice if you want to protect yourself from paying the difference between what you owe and what the insurance company will pay. With GAP, be sure to ask the right questions of your insurance agent. Some GAP plans don’t cover cars below a certain value, and other restrictions may also apply.
All insurance companies are different, and every policy should be read from beginning to end before you decide what to pay for and what to pass up.
Florida auto insurance, Insurance policy | admin | June 25, 2009
