What Is GAP Insurance?
According to the Nevada Division of Insurance, GAP insurance is Guaranteed Auto/Asset Protection. With this insurance, you could be covered for the difference between how much your vehicle is worth (cash value) and what you still owe on the vehicle (i.e. balance from a loan). To understand GAP insurance, you must understand that any auto insurance claim is subject to the total loss of the asset (total cost of damage/replacement cost of the vehicle). So essentially, GAP insurance provides the remaining amount that you owe on your car loan. This is for cases in which the total settlement amount wouldn't have covered the full cost of the remaining balance on the loan.
Some GAP insurance policies can also cover the deductible. The deductible is the amount that a policyholder must pay before their insurance will provide coverage. Some people have high deductibles and others have low ones. They can choose this for themselves based on how high or low they want their insurance payments to be. Who should consider GAP insurance? The Nevada Division of Insurance suggests that GAP insurance is most valuable to those who A) have extended financing plans (because the value of the car would depreciate faster than you could pay off your loan, in some cases), B) make low down payments, C) have high insurance interest rates or D) have chosen a loan that has a term longer than 60 months.
To learn more about GAP insurance and how it could affect your case, please get in touch with our firm today. Trust Shook & Stone's experience in this area to provide the help you need!