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Gap insurance is a type of insurance coverage that is intended to protect car owners in cases of total loss. In Florida, gap insurance may be especially useful due to the high risk of natural disasters, along with the usual risks of driving a motor vehicle on the road.
How Does Gap Insurance Work?
Gap insurance is insurance that will cover the difference between the cash value of your car and the amount you still owe on the loan. For example, if you were to buy a brand new car, as soon as you drive off the lot that car depreciates in value. So, if on your way home in that new car, you get into an accident and total the car, you would be left with no car but still owe money on a car payment. This is because traditional car insurance only pays you out at the cash value of your car. However, if you were to have gap insurance at the time of this accident, gap insurance would cover the difference between the cash value of your car and what you owe in loans.
Gap insurance can also be helpful if your car is stolen. Whether it is stolen and totaled or never found, gap insurance will cover the difference.
How Do You get Gap Insurance?
In Florida, you can purchase gap insurance in several ways. Acquiring gap insurance can be as easy as calling your auto insurance provider, they will usually provide it at a lower rate. You can also purchase a stand-alone policy from the car lender or dealer where you purchase your vehicle. Often, if you are getting an auto loan to buy a car, you will be required to obtain gap insurance as most gap insurers require that you carry both comprehensive and collision coverage before you can obtain gap insurance coverage.
While shopping around for insurance, it is essential to compare quotes and policies to ensure you get the best policy at the best price. Be sure that you fully understand the policy you go with and any restrictions that come along with it. Some gap insurance will place limitations on the following:
- Model year – some policies may require your vehicle to be within a specific year range or have a specific minimum value
- Require other forms of insurance – some policies may require that you obtain additional insurance policies, such as comprehensive or collision coverage
- Restrict coverage – some policies may restrict the amount of coverage they offer based on the value of the vehicle
- Deductibles – some policies will not consider your deductible to be part of the “gap” and will not cover it
Why Should You Get Gap Insurance?
Gap insurance can save you thousands of dollars in the event that your car is totaled or stolen and never recovered – especially if this happens within the first several years of owning a brand-new car. Additionally, depending on where you purchase your policy, monthly payments can be very low. Overall, if you are purchasing a new car, gap insurance is a good safety cushion to have and be able to use when necessary. If you or a loved one was involved in a collision and are unsure the value of your claim, speak with an experienced Tampa accident lawyer to explore your legal options.