If you are ever involved in a car accident, and the vehicle is totaled, gap insurance will pay the difference in the amount that the car insurance company pays for the totaled vehicle and the amount that you owe on your car loan. When purchasing a new or used vehicle with little or no down payment, you run the risk of owing more on the vehicle that the vehicle is actually worth. In this type of situation, gap insurance is a very good idea and could save you thousands of dollars in the event of a major accident. So, here are some tips on how to choose gap insurance coverage that is best for you.
One of the easiest ways to get more affordable rates on gap insurance coverage is to simply pay a lower price for a vehicle. In order to negotiate lower prices, you need to know how much a particular vehicle is worth. So visit sites like Kelley Blue Book or Edmunds and review new and used car pricing information relevant to the vehicle you wish to purchase. Knowing how much a vehicle is actually worth will also help you double check figures used for policy quotes from Gap Insurance companies.
When purchasing a new or used car, the dealership will almost always offer you gap insurance when discussing the car loan for your vehicle.
However, many dealerships substantially mark up the price of gap Insurance and use this type of insurance product to increase their profits. So, before you ever visit the dealership you should go online and search for companies that sell gap insurance policies and try to get general policy price information for types of vehicles you’re interested in.
While the pricing will not be exact because you’ve not yet purchased a vehicle, you can get good general pricing ideas by using the price information you obtained from Kelley Blue Book or Edmunds and estimating the amount of down payment you will be making. This will help you get a general idea of how much more you will owe on a car loan than the vehicle is actually worth.
If the dealership price for gap Insurance is much higher than example quotes you received on the Internet, make sure to inform the salesperson or finance and insurance manager of the price discrepancy. Also, ask them if they would consider reducing the price of gap insurance as you feel the price is simply too high. In many cases, gap insurance is a product that most dealerships can offer a discount on—so always make sure that you ask for a discount.
Before accepting a gap insurance policy, always make sure that you check the policy for any type of irregular exclusions. Your gap insurance should not only cover losses for an accident or collision, the policy should also cover fire and theft as well.