What Does Gap Insurance Cover?

“Why would I need another insurance policy?” you may be thinking, “I have a full coverage policy, so I’m fully covered. It’s even in the name.” That’s true, except that the “full” in “full coverage” actually refers to the full market value of the car at the time the vehicle was totaled, not the full amount of your loan. What if, at the time of the accident, you owe more on your vehicle than what it is currently worth? You’ll be on the hook for whatever is left on the loan after the insurance pays out. That’s where gap insurance comes in. What does gap insurance do, exactly?

What Does Gap Insurance Do?
Simply put, gap insurance pays the difference between the market value of your car at the time it was totaled and the total amount of your car loan. This is important, as a new vehicle starts to depreciate in value the moment you drive it off the lot. That is the reality. You don’t want to be stuck trying to pay off a car you can’t even drive. Gap insurance takes out that worry.
Whether you need gap insurance is one of those things you should consider when acquiring a new or used vehicle, along with other questions, like: How big of a payment can I afford? Where should I apply for financing? Should I buy or lease my new ride? Exactly what does gap insurance cover? The finance department at Standard Jeep Ram in Medicine Hat will help you understand the terms of your loan, which in turn will help you decide if you need gap insurance, but generally you should consider getting gap insurance if the following applies to you:
  • You rolled an old car loan into a new one
  • The term of your loan is for 60 months or longer
  • Your down payment was smaller than 20 percent
  • You’re leasing the car instead of buying
Gap insurance generally pays out under the following circumstances:
  • Your car is stolen
  • It’s destroyed in a fire
  • It’s totalled by vandalism
  • It’s totalled in an accident
  • It’s destroyed by a natural disaster (“act of God” in insurance terms)

Take a Test Drive at Standard Jeep Ram Near Calgary

Whether you need to get gap insurance for your new vehicle or need to visit us for routine maintenance, Standard Jeep Ram has you covered! We’re conveniently located near Lethbridge, so pay us a visit if you’d like to test drive a new vehicle or get the low down on any insurance information that you need.

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