Importance of Gap Insurance

Gap insurance is one of those questionable practices most automobile lessors practice. Knowing what gap insurance is and its importance may ease your mind and educate you on your options.

I cannot begin to tell you the countless calls I received from customers asking if they have gap insurance and telling me they need to speak to claims because they were just involved in an accident and need a claims adjuster to come look at their leased car.

I am experienced in the claims department, so when they ask if they had gap insurance, I cringed because the customer did not know their own policy.
Gap insurance is one of those questionable practices most automobile lessors practice. Knowing what gap insurance is and its importance may ease your mind and educate you on your options.

Gap insurance is, in its simplest terms, Insurance that covers the "gap" between the actual value of your automobile and what you owe on the automobile to complete the payments. The perils gap insurance covers are vehicle theft and total loss.

For instance, Let us say you lease an automobile for $30,000 and your payments are $500.00 per month. Now, let us say you have an accident four months later that totaled the automobile and the claims adjuster tells you that your vehicle was only worth $20,000 at the time of the accident. Your insurance pays you $20,000; you paid in $2,000 in payments, that leaves you with 8,000 needed to completely cover the cost of the automobile. This is where gap insurance would help. If you have gap insurance, (by the way, most lease agreements build this insurance right into your lease agreement) the gap insurance would pay the difference, less deductibles you would owe before total loss is assessed.

Most major auto insurance companies offer gap insurance and shopping for gap insurance is quite easy. You can shop online by using your favorite search and typing in "buy gap insurance".

To sum it all up, Gap insurance is added protection. Knowing your options and educating yourself allow you to take more control over your financial future and protect your financial health in tough financial times.