If you have a loan or lease on your vehicle, did you buy GAP coverage when you bought your car?
What is GAP coverage? It is a coverage that pays out after an insurance claim IF you owe more than the value of the car. The car insurance will pay up to the current value of that car and that is it. If you owe more the GAP insurance will help pay off the difference.
Say you bought a brand-new car for $25,000. Let's say you still owe $20,000 on your auto loan when your car is totaled in a covered collision. Your collision coverage would pay your lender up to the totaled car's current market value that we will say is worth $19,000. If you don't have gap insurance, you would have to pay $1,000 out of your own pocket to settle your auto loan on the totaled car. If you have gap insurance, your GAP insurer would help pay the $1,000.
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