Gap Insurance

You have just bought a new car a few months ago. The balance on your loan is $22,000. In a very rotten twist of luck, you are in an automobile accident. Your vehicle is completely totaled. However, the insurance company is only going to pay $18,000 for your vehicle. In just a few months' time, your vehicle has dropped in value over $4,000. What do you do? If you have gap insurance coverage, you don't have to worry. That $4,000 is covered.

Why Cars Depreciate So Quickly

There are several factors which determine how quickly a vehicle depreciates. One of the most important things is the type of vehicle. Many vehicles will depreciate much faster than others will. The amount of miles put on the vehicle, as well as the overall condition will also affect the value. Even a little dent can cause the value of your vehicle to go down. The old adage about a vehicle's value dropping as you drive it off the lot is not too far away from true. Most vehicles have at least a ten percent depreciation immediately after purchase.

Protect Your Vehicle

If you don't have insurance, you're sure to see a real problem if you have an accident. Not only is it against the law in every state to drive without insurance, you can incur monstrous repair and medical bills. If you have a lien on the vehicle, you will also owe the finance company the balance on the loan, but you may not have a vehicle anymore! Keep your vehicle protected with auto insurance at all times.

Also Consider Uninsured Motorist Coverage

In some state, uninsured motorist coverage is required. However, if you live in a state that does not required it, you want to make sure you include this coverage on your policy. By 2010, experts estimate that six out of ten drivers will not have any type of coverage on their vehicle. If you are in an accident with someone who doesn't carry coverage, you will be responsible for your own repair if you don't have this uninsured motorist coverage.

One of the best feelings many people have is when they purchase their first new car. It takes a commitment to make the monthly payment and some people go through a lot just to make sure the vehicle is never repossessed. However, if you're in an accident and you don't have gap car insurance, then you're sure to have some problems if your vehicle is financed for more than the insurance company is willing to pay.

Ask Your Insurance Company What the Value Is on the Vehicle

Ask your insurance company what the value is for your car. This will give you a good idea if you need to purchase gap insurance coverage. If the difference is over a $1,000 and your deductible is $1,000 as well, it now will cost you $2,000 to replace your car! This can be a tremendous amount of money to most people. You may want to lower your deductible in order to pay less in case of an accident.

Do You Own a Custom Vehicle?

If your vehicle has many custom or after-market parts, you'll want to make sure these are covered on your policy. Otherwise, you may only receive reimbursement for a stripped down model if you are in an accident. Some of these parts, such as stereos, wheels, trim, and other add-ons can quickly raise the value of vehicle by thousands of dollars.

A Few Final Thoughts

Many people are not even aware that gap insurance coverage is available. They simply go on their way until the unthinkable happens. All of sudden, they are out several thousands dollars and have no vehicle. However, it's in your best interest to make sure you are protected. Keep gap insurance if your vehicle is worth less than it's financed for. It's the only way to ensure that your money is not spent covering what you thought insurance would cover in the first place.

If you need gap insurance, then check out Auto Quote Now. They offer quotes on all sorts of policies to keep your and your family safe!