A brand new car may be a dream purchase for many people, but it is actually a very risky purchase. As you must know, the value of a car depreciates at an extremely fast rate. The moment you drive it off the showroom, there will be a reduction in the value. And after 3 or 4 years, the value of the car will become around half of the original value.
However, if due to some reason, you are involved in an accident and your car is totaled, you will have to pay much more than what your car will be worth that time. This is where GAP insurance will be able to save you.
GAP insurance is basically an additional coverage which will take care of the remaining part of your loan if you owe more than the depreciated value of your car.
Let us understand this with an example. Let's assume that you buy a car for $25,000, after 2 years of constant usage, the value of your car will become around $15,000. Now, suppose you get involved in an accident and your car is totaled. The remaining loan amount for your car is $20,000. Your insurance company will pay just $15,000. However, GAP insurance will also take care of the remaining $5,000.
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You must be wondering whether getting GAP insurance is really worth it or not. It is an optional instance cover and completely depends on you whether you want to take it or not. However, it can protect you from a severe financial crisis. You must definitely go for a GAP insurance if you own a car which depreciates very quickly.
You can buy GAP insurance from various parties. One option is to purchase it from your primary insurance provider. The advantage is that if your car is totaled, you will only have to file a single claim instead of filing multiple claims. However, generally, they charge high rates of interest.
Another option that you have is to purchase it from the dealership. However, that can be extremely risky. The premium will be added to your monthly loan amount and the interest rates are generally high.
Another option is to buy GAP insurance from external insurance providers. If you want to go for this option, you will have to do some research and find out which service provider is providing the cheapest rate.
However, no matter where you get your insurance from, you must carefully go through the policies. Some policies will agree to pay the difference amount, irrespective of how large the 'gap' is. However, some policies will only agree to pay a certain percentage. Hence, before taking any decision, you need to understand the policy properly.
If you are willing to take a GAP insurance for your vehicle, contact us at S.T. Good Insurance of Florida. We will provide comprehensive policies at very affordable rates. Contact us today at S.T Good Insurance of Florida for a quote at (772) 287-3625.