Auto Gap Insurance: What Exactly Is It?

When it comes to auto insurance, most people are unaware of auto gap insurance. Auto gap insurance, however, could be the lynch pin that winds up saving a person an ample amount of money. Throughout the course of this brief article, you will learn what exactly auto gap insurance is, where you can purchase it, and some information on loan / lease coverage.

What Is Gap Insurance?

Gap insurance essentially covers the amount you would normally have to pay in order to foot the amount that your normal auto insurance coverage will not pay. There is no cap on the amount that gap insurance can pay out, so it will pay the precise amount that you need to cover the bill. Most gap insurance is marketed towards drivers of new vehicles. Most brand new vehicles are not entirely covered by auto insurance, so this gap "fills in the blanks" and effectively makes your vehicle entirely covered. Gap coverage is usually only offered as part of a package plan, which means that you will most likely have to purchase collision and comprehensive coverage.

Where Can I Buy It And How Much Does It Cost?

Most providers offer gap coverage, and your current provider may very well offer it. Some gap coverage is offered under the rubric of a lease / loan plan, although these are two quite different things. Although the cost of gap coverage can differ greatly from provider to provider, it is usually quite inexpensive, and may only cost a few extra dollars a month in addition to your current insurance. Car dealers often try to sell gap insurance to first time car owners, but their prices tend to be quite inflated when compared to that of regular providers; you could wind up paying upwards of $1,000 more than you would had you stuck with a provider.

What Is Lease / Loan?

On paper, lease / loan insurance plans sound quite similar to gap coverage. Both will attempt to cover the "gap" between total coverage and what you have to pay, but a lease / loan plan will not completely cover this amount. Lease / loan coverage tends to be a bit cheaper than gap coverage, but tends to only cover a quarter of the difference.

Gap coverage can wind up saving you an ample amount of money in the event of an accident. Hopefully, this brief article has given you some idea of what to expect when you opt into gap coverage. Contact an insurance agent, like those at Axiom Insurance Agency and other offices, for more help and answers.