As soon as you drive your brand new car off the dealership lot, it starts to decrease in value. However, the amount that you owe on the vehicle will not change. If you total your new car, your auto insurance company will only provide a payout for the value of the vehicle, not for how much you owe, which can leave you scrambling to come up with thousands of dollars. Investing in a gap insurance policy can help to give you the financial protection you need in case of an accident.
Gap insurance is an optional coverage option that you can add onto your auto insurance policy when you purchase a new car. It will pay the difference between the amount that your vehicle is worth at the time of an accident and what you still owe your lender. If you do not have gap insurance coverage, you will be left paying off the loan on a vehicle that you no longer own.
Depending on the lender that you use to purchase your new vehicle, you may be required to invest in gap insurance in addition to your comprehensive and collision insurance coverage. If you are leasing a vehicle, your gap insurance may be included in your monthly payment. Before you invest in a separate policy, make sure to check your lease paperwork.
Without gap insurance, your auto insurance company will only provide a payout for the actual cash value of your vehicle after a covered loss. The actual cash value of your vehicle is the cost of your vehicle when it was new, minus depreciation for mileage, age, physical condition, and other factors.
To ensure that your new car has the coverage it deserves in case of any disaster on the road, contact Abbate Insurance in New Haven, Connecticut.