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Your heart sinks when you learn your totaled car's insurance payout won't cover your full loan balance. This leaves you stuck paying both your remaining loan and a new car payment. Without GAP insurance, this scenario plays out for many Central New York drivers who finance vehicles.
At the Horan insurance agency, we work with multiple carriers, which helps us understand how insurance companies determine vehicle values after total losses. We can discuss how auto insurance works with GAP coverage, and we'll explain your coverage options.
In this article, we'll explore:
Insurance carriers base their settlement decisions on your vehicle's current market value, not your loan balance. When you finance a $20,000 vehicle, its value drops the moment you drive off the lot.
A year later, you still owe $17,000 when an accident results in a total loss. Your auto insurance determines the car's market value at $16,000. This leaves you paying the $1,000 difference to your lender while also needing to replace your vehicle.
Unlike standard auto insurance policies, GAP (Guaranteed Asset Protection) coverage comes from:
The cost of GAP coverage can vary depending on several factors, including the type of vehicle, loan amount, and coverage provider. While it is often affordable, it's important to get a clear understanding of the total cost of GAP coverage and factor it into your decision.
Once you decline GAP at purchase, you may not have another opportunity to add it later.
GAP insurance may be worth considering in several situations:
No one wants the shock of owing money on a car they can't drive anymore. GAP insurance can help address this risk, but you'll want to understand how it fits your situation.
As a Central New York insurance agency, we aim to help clients understand their auto coverage options, including how GAP insurance works with their policies. While we don't sell GAP coverage directly, we'll explain how it coordinates with your auto insurance.
Click the Get a Quote button below to discuss your auto insurance and learn how it works alongside GAP coverage.
Daniel is an accomplished content creator. He has been working in publishing for almost two decades. Horan Companies hired Daniel as its content manager in November 2022. The agency entrusted its messaging to him. Since then, Daniel has written insurance articles, service pages, PDF guides, and more. All in an effort to educate CNY readers. He's helping them understand the world of insurance so they can make informed decisions.
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