GAP (guaranteed asset protection) insurance is a type of optional car insurance coverage for vehicle owners. If you happen to be involved in a car accident, including one that’s not your fault, GAP insurance can make it easier to obtain a new vehicle without having a big out-of-pocket burden. Today, we’re going to take a closer look at why gap insurance is important and what benefits it offers.
What GAP Insurance Covers
The average car depreciates or loses about 11 percent of its value once it leaves the lot of the dealership. According to the Insurance Information Institute, this increases to 20 percent after a year. What GAP insurance covers is the “gap” between the original value of your vehicle and its value when accounting for depreciation. GAP insurance is optional if you purchase a vehicle, but required if you lease. However, it only applies to worst-case scenarios when a vehicle is damaged beyond repair.
It Can Cover a Fairly Significant Gap
According to a leading insurance company, GAP policies typically protect both new and used vehicles with a value of up to $100,000. This includes up to $50k in losses. In some cases, deductibles for insurance up to $1,000 are also covered. Because of what GAP coverage typically offers, it can be very much appreciated if you still have a sizable vehicle loan to pay off after you are involved in a car accident.
Don’t Count on Accident Compensation to Fill the Gap
GAP insurance can still be important if you’ll be receiving payment from the at-fault party’s insurance provider. This is because they will also, at most, only reimburse you for the current value of your vehicle if it was totaled with depreciation factored in. But what if you are expecting fair compensation for your injuries? Realistically, you may not have much left to cover the gap between the original vehicle value and it’s value post-depreciation once you handle your medical expenses. Plus, it can take a while to receive compensation, especially if your case ends up in court. Also, the at-fault party’s insurance provider may challenge the amount you are seeking for your vehicle’s damage. This could ultimately leave you with an even bigger gap to cover yourself if you don’t have GAP insurance.
What Can a Personal Injury Attorney Do Following a Car Accident?
If you are involved in a car accident and your car is totaled due to another party’s negligence, a personal injury attorney can offer advice on how to proceed legally. This is also true if the accident was due to the fault of the vehicle’s manufacturer or the dealership due to mechanical flaws. With insurance, an attorney may advise you to file a claim with your own insurance company until all case-related details are worked out. With situations like this, GAP insurance can also make it easier to purchase a suitable and similar replacement vehicle so you can get back to your normal routine.
