What Does Gap Insurance Cover?

Tiny car with insurance documents

 

You may have heard the term gap insurance before, but what does gap insurance cover? This type of car insurance will cover the difference between what you owe on your car and the actual market value when your car is totaled in an accident. Basically, gap insurance can help you avoid ending up under water on your loan.

It’s important to note that gap insurance does not cover collision or comprehensive damages, which are usually covered by separate policies. If you have questions about whether or not to purchase gap coverage for your vehicle, please contact our financing team today!

What is Gap Insurance?

If you purchase a new vehicle, it will begin to depreciate as soon as you’ve driven it off the lot. This means that, at least for a time, it may be worth less than what you actually owe. So, what does gap insurance do? Gap insurance is something you can add to your car insurance in order to make sure that if your car is damaged beyond repair, the money you spent on your car will still be paid out, regardless of what the vehicle is actually worth.

Gap insurance pays out in the event that you run into trouble with any of the following:

  • Theft
  • Fire
  • Vandalism
  • Accident
  • Acts of nature (tornado, hurricane, flood, etc.)

Gap insurance does not cover your deductible. Extendable warranties and protection packages are also not covered. Gap insurance only covers the difference between what you owe and what your car is worth!

Why Would You Buy Gap Insurance?

Gap insurance is not required by law, and that means the only people who would want to buy gap insurance are those with cars worth less than what they currently owe. If you’ve driven the same car in Cherry Hill and %%taget_city_2%% for many years, and you don’t owe much money on the vehicle, you’re probably safe to proceed without gap insurance. On the other hand, it’s often a smart purchase for the driver who is bringing home a new vehicle.

If you purchase gap insurance, it will protect the investment you’ve made. If the worst happens and your car is totaled or stolen before you’ve finished making payments on it, then at least you won’t be left on the hook for whatever money remains unpaid on your loan.

Learn More About Financing and Insurance with Our Team!

The team at Nissan of Turnersville wants you to be able to move forward with confidence. If you would like to learn more about financing and insurance, feel free to check out our other useful car buying tips! You can also contact our financing team to learn more about your options from your home in Turnersville or Woodbury.

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