Sometimes drivers can buy their own car only by making a purchase on credit. In this case, they have a certain time to pay the entire required amount. This is a very convenient solution. However, do not forget that each loan has its own disadvantages. In the case of buying a car, there is a risk that it can become the object of theft or an accident.

In both cases, the owner may face a situation where the current value of the car at that moment will be lower than the loan amount. Therefore, additional funds will have to be paid to the creditor after the incident. Car GAP insurance will help protect the budget from such waste. In the prepared material, we tell what this type of coverage is, and what is its validity period.

Source: Rollins Insurance.

For What Cases Is GAP Insurance Coverage Intended?

The service is not a mandatory type of insurance for car owners. However, it is a very important component of reducing financial risks in the case of vehicle loan obligations. To understand how GAP insurance works, it is worth considering a simple example of a life situation. The driver buys a car on credit and periodically remits the payment according to the contract.

After some time, an emergency situation occurs, which causes consequences in the form of severe damage incompatible with further operation. If at this moment the loan has not been fully repaid, then the owner remains with certain obligations. However, it is worth considering the depreciation of the vehicle. It can cause its price to drop significantly.

In such circumstances, there is a difference between the current value of the car and the amount the owner needs to pay the lender. In other words, the balance will be increased by several thousand dollars on average. If the driver has taken out insurance GAP coverage in advance, the insurance company will cover these costs. It completely eliminates the financial difference, and the owner avoids unforeseen expenses.

The same scheme applies in the case of kidnapping. Taking out car GAP insurance coverage helps to get rid of the consequences in the form of additional payments in an increased amount. To use the service and pay off your debt to the creditor, it is enough to contact an insurance agent and leave an application. All other concerns are taken care of by the company.

What Is the Validity Period of GAP Auto Insurance?

Companies offer a product for the period during which financial risk insurance is required. This means that the client can choose any period and issue the document. The terms are immediately specified in the contract. At the same time, each owner of GAP car insurance can decide to cancel the policy at any time.

Having considered auto insurance tips, we can conclude that the reason for such a decision may be the lack of need for coverage. To determine when such a moment comes, it is worth comparing the balance on the loan and the current value of the vehicle. If these indicators are equal to each other, then the car GAP coverage becomes unprofitable.

In this case, you can contact the insurance company and discuss the details of contract termination. The same decision can be made if the balance of the loan is paid. Completion of the relationship with the creditor automatically confirms the absence of the need to use GAP coverage insurance. If both conditions are absent, then there is no need to close the policy.

From a financial perspective, policy payouts will not have a significant impact on overall costs. After all, the registration of additional GAP coverage will increase the annual cost of services by no more than $60. According to statistics from Value Penguin, the total cost of insurance during this period is approximately $2,361. This amount is equivalent to 3.9% of the total income of families in the United States.

How Long Does the Car GAP Insurance Payment Take?

The term of payments for the specified type of coverage depends on the conditions of the specific company, state, and circumstances of the situation. It should also be taken into account that the process includes several stages that require a certain amount of time. As a general rule, payments for auto GAP insurance coverage occur at least after 5 days. However, in most cases, this term is longer.

Experienced drivers indicate that insurance companies usually pay out after several weeks or even a month. This period of time is necessary to perform mandatory actions. The main one is the procedure during which the degree of damage to the car is determined and its general condition is assessed. Experts need from 5 to 30 days for this. Sometimes this period can be extended.

When the fact is proven, the preparation of all the necessary documents for car GAP coverage begins. This process can also take several days. When all formalities are completed, the insurance company moves to the final stage – payments. It happens quickly enough if all the details are clarified.

Which Insurance Companies Offer GAP Insurance for Cars?

In the USA, almost all well-known insurance organisations provide this service. Each of them offers individual terms and payment procedures. That is why, when choosing auto insurance GAP coverage, you should familiarise yourself with the tariffs of several companies in advance. The only exception is the popular organisation Geico. There is no such coverage in the list of its insurance products.

In addition, some companies have certain restrictions on car GAP insurance coverage. They relate to vehicles, namely models and their condition. For better orientation, it is enough to read the table.

To choose a GAP auto insurance coverage you should compare the conditions of the organisations and identify the best solution for your needs. Sometimes for this, it is also worth contacting the managers and getting answers to additional questions.

Under What Conditions Is Car Insurance GAP Coverage Invalid?

The policy allows you to get rid of many financial risks associated with obtaining a car loan. However, it also has certain features. They refer to cases when GAP car coverage does not apply. Among them, you can highlight:

– The occurrence of injuries (it is about the costs of treatment)
– Transfer of money from a previously rented car
– An accident in which the car did not break down
– The occurrence of problems with the engine
– Carrying out repairs that are intended to eliminate the effects of natural wear and tear

You should find out about all these and other cases in advance from the company that provides GAP car insurance coverage. This will help to avoid unpleasant consequences.

Conclusions

Car loan GAP insurance is a reliable assistance for those who decide to pay for the vehicle in instalments. Thanks to this type of coverage, you don’t have to worry about the need to make additional payments to the creditor in case of an accident. GAP insurance ensures the liquidation of the difference. The term of use of such a policy is practically unlimited. You can use it as much as you want.