Luckily, you’re okay— but your car is a total loss. That’s not okay.
Your auto insurance company pays out your accident claim up to the actual cash value of your car, and from that you pay off your loan. Seems simple enough.
But what if the loan balance you owe is more than the claim check you get from the insurance company? What about that gap? (You see where this is going.) If you have GAP coverage, then the difference is covered and you don’t end up making car payments on a totaled car that’s sitting in a salvage yard somewhere.
By the way, GAP coverage also extends to unrecovered stolen cars.
No. Do you need GAP coverage if you borrowed close to 100% of the value of your car and depreciation is lowering your vehicle’s value faster than you’re paying your loan down? YES! (Maybe that’s an acronym for You Entirely Should.)
Well, of course, it’s insurance and insurance is complicated. Since insurance does get confusing sometimes, give us a call with your questions and a loan consultant will walk you through what’s best for you.