Pretty much every driver knows the importance of car insurance. This is a vital safety net in the event that you are involved in an accident. And while you may be familiar with collision, comprehensive, and other kinds of insurance, there’s another type you should also know: GAP insurance.
This one doesn’t offer coverage for repairs, but it could affect your wallet nonetheless. This guide goes over the importance of Ford GAP insurance:
What is GAP Insurance?
Guaranteed Asset Protection – or GAP – insurance covers you if the car you’re financing is a total loss in a crash or is stolen. This is because insurance companies only usually pay the actual cash value of a vehicle.
For example, let’s say you are financing a Ford Explorer and it gets totaled in an accident. Your insurance company decides it is worth $10,000, so that’s what they give you. The problem is you owe $15,000 on it. So, where does that extra $5,000 come from? You. Unless, however, you have GAP insurance. In this instance, whatever remaining money is left on your loan will be covered.
Additional Benefits of GAP Insurance
Aside from that major advantage of saving you possibly thousands of dollars, GAP insurance also has other benefits. It also protects you from depreciation. In addition, it will pay the deductible, as well as the unpaid finance balance, if there is a deductible payout.
When Should Someone Consider GAP Insurance?
GAP insurance isn’t always necessary. If you’re not seeking a big loan, it may not be cost-effective. However, if your down payment is less than 20 percent, it’s probably a good idea. The same is true if your loan is 60 months or longer or your car has a high depreciation rate.
Questions about GAP insurance? Get in touch with Don’s Ford in Utica to get more information.