Auto Insurance Options Series: Gap Insurance

Have you ever felt overwhelmed or confused by the amount of car insurance options? This series is designed to help you understand the different options you have when acquiring car insurance and what these different options protect and why they’re important. Knowing your car insurance options before you face having to file a personal injury claim can put you in a much better position if you are ever injured and in the need of a car accident lawyer.

Gap insurance is designed to protect you when you buy a car on loan. When you buy a car on loan and drive the car off the lot, you immediately owe the bank more than the car is worth. if you are involved in a wreck that is not your fault where your car is totaled, the party responsible for the wreck owes you the fair market value for the car. However, due to interest on the car loan, a person will often owe more money on the loan than it is worth. This leaves a person in the uncomfortable position of making payments on a car they no longer own or risk defaulting on a loan and destroying their credit score.

How can you prevent this from happening to you? You can purchase gap insurance when you purchase the car. The purpose of gap insurance is to cover the difference between the amount owed on a car loan and the fair market value of the car in the event the car is totaled in a wreck. Gap insurance gives you peace of mind in knowing that if your car is destroyed through someone else’s fault, you will not owe money on the car. You can receive the fair market value from the other driver’s insurance coverage and the difference between the amount owed and the fair market value will be paid by gap insurance.

Hopefully, you will never been involved in a car crash and won’t need a lawyer to file a claim on your behalf. However, knowing what insurance options you have out there only puts you in a better position in case you are ever involved in a car accident.

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