Auto Gap Insurance: What You Need To Know

Auto gap insurance is one of the best forms of  that you can pay into. Auto gap insurance is not the most well known form of insurance on the market today, so it is important to have a solid grasp on what auto gap insurance is and what it entails. There are a few things that you should know about auto gap insurance.

What Is Auto Gap Insurance?

Essentially, auto gap insurance will pay for what you normally would contribute if you are involved in a car accident and your car insurance will not cover the total amount.

There is no maximum amount of coverage involved in auto gap insurance, either, which means that auto gap insurance pays exactly for the amount that you owe. This is particularly useful if you have purchased a new car. New car purchases are usually not entirely covered by insurance providers, which means you have a certain "gap" in the amount that you would normally think you were owed.

This "gap" tends to last anywhere from 2 to 3 years, depending on your auto history and the make and model of the vehicle itself. Gap insurance is generally only available to those that have purchased comprehensive and collision coverage, as well. Consult with your provider of choice to see if this is the case.

Where Can I Purchase Auto Gap Insurance And How Much Does It Usually Cost?

If gap insurance is not already part of your current insurance plan, it is best to consult with your current provider. Your provider will let you know if this is available under their current system; most providers offer gap insurance under some form of a lease / loan plan.

Rates vary from provider to provider, but gap insurance generally only costs a few dollars extra per month. Dealers will often sell gap insurance, as well, but this tends to cost significantly more than you would pay through an insurance provider. It never hurts to ask your auto dealer, but you might be paying up to four times more for auto gap coverage from a dealer than you would had you stuck with an insurance provider.

What Is A Loan / Lease Form Of Coverage?

Loan / lease forms of coverage are similar to gap insurance, but they are not the same thing. They are similar in the sense that they both aim to cover the amount that is not provided by a provider in the case of a total collision, but the difference is the amount that is covered.

A loan / lease form of coverage will not provide you with the total difference that a gap coverage plan will. In fact, a loan / lease form of coverage will generally only supply you with about 25% of the total amount that you owe.

For example, if you wound up having to pay off $1,000 as your gap amount, while your provider provided you with the rest, gap insurance would supply you with all $1,000 of that amount. A loan / lease form of coverage, on the other hand, would only supply you with $250.

Although gap coverage seems like a difficult subject to grasp at first, it generally is not. Most providers offer gap coverage, so it never hurts to ask your current provider what their gap policy is. If you have purchased a new car, it is a good idea to contact your insurance agency about gap coverage. To learn more, speak with a business like H and M Insurance.