Article by Charles Babbage

GAP insurance cost depends on the type of financial coverage you are interested to opt for. Before further discussion about this cost, you will have to understand the meaning of auto GAP insurance policy and to what extent it can come handy to protect you from financial loss.This insurance coverage is a type of financial policy which makes up for the gap between the dues owed to bank and the total compensation package sanctioned by the insurer/underwriter for bearing the car maintenance cost. To be brief, auto GAP insurance takes care of the shortage of funds which happens due to the prominent gap between the unpaid car loan and the compensation amount provided by the underwriter.

In case the insurance company pays less which is not sufficient to cover the car loan amount, there will be lacunae and you will have to seek for an alternative way to fill up the gap. For this reason, there is need for thisG insurance policy to overcome the financial crunch. For instance, suppose the total face value of the new car is somewhere between 20,000-25,000 dollars and you owe the bank approximately 15,000 dollars which needs the clearance for acceleration of the credit scoring. By mistake, assume you have met with car accident or theft; your car has been smashed and split into small pieces. In that case, insurance company will pay you total 15,000 dollars in cash which is equivalent to the purchase value of a new car. Your underwriter will not bear the car loan which is still pending. Then you will have shortage of 5-10 thousand dollars for clearing your car loan. The main job of GAP insurance company is to pay that fund which is required to clear the unpaid dues. ,000-,000 is the gap and an underwriter will compensate for that gap.

How Much does GAP Insurance Cost?Gap insurance cost varies from one insurance company to the other as each offers different plans and premium rates for purchasing this insurance. It will be more convenient to search for online quotes to choose cost effective GAP insurance coverage. You will have to select a GAP insurance company which provides flexible and affordable premium rates. The terms and conditions of this type of insurance policy should be understandable and flexible to a great extent. This insurance will cover the difference between unpaid vehicle loan amount and the compensation amount for the market value of the new or used car which has been wrecked by accident. This gap will be maintained by a GAP insurer which offers different sorts of financial kits. What does this Cost Cover?The GAP insurance cost must be comfortable. The liability of an underwriter is to offer financial backup to remove the gap/difference between the amount which the insured owes the bank and the market value of the new vehicle. Search for a qualified insurer who is genuine to offer financial support to the insured. Check online premium rates and other GAP insurance related issues for gaining advantage while supporting the transaction.

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Question by Gabriel D: gap insurance?
I have a 2001 lexus that I bought last year as a pre-owned vehicle. It’s valued at $ 10,000, but I owe $ 16,000 on the car (thru extended warranty, service coverage, etc from the dealer). Can I purchase gap insurance to cover the difference if i wreck my car, etc? I’ve heard that they mostly take new cars. Please no comments that aren’t associated with the question above and i don’t need your opinion just an answer =) thanks.

Best answer:

Answer by Sue
You can’t purchase it on your insurance policy on a used vehicle. You can only purchase it on a brand new car, no previous owner, current model year or better (so now it would be a 2008 or 2009 vehicle) and you have to purchase it the day you add the car to your policy, which would be the day you purchase the vehicle, it cannot be added a year later. Also, it doesn’t cover additional items added to the loan such as the extended warrenty, service contract, etc or any rollover from another loan. It would only cover what you borrowed on the car itself – say you borrowed $ 13,000 on the car & $ 3,000 in the extras for the total of $ 16,000, it would only cover up to the $ 13,000.
You can try to go back to your dealer and/or the loan company & see what you can do but I doubt you can purchase GAP coverage now. I have seen GAP coverage on loans that cover the extras but it is expensive ($ 500+) where on the insurance it is normally less than $ 30 per year.

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Tags: Cost, Insurance