If you don't have full coverage, gap insurance will start covering you after your car insurance policy limits are reached. Gap insurance pays for the difference between the value of your car after it’s been totaled and the amount remaining on your loan or lease. Standard car insurance will only cover the actual cash value of your car, which could leave you owing thousands on a loan for a car that you’re no longer able to drive if you don’t carry gap insurance.
Full coverage generally consists of liability car insurance at higher limits, collision coverage, comprehensive coverage, medical benefits, and uninsured/underinsured motorist coverage, depending on your state law. Sometimes, the minimum insurance coverage required by state law is only liability car insurance which only covers the damages to the other driver's insurance if you're at-fault in an accident. This means that, if you only have liability coverage and you're at-fault in a car accident, there is no other insurance that can help cover the loan on your car, and gap insurance will most likely not be sufficient, leaving you with negative equity.
Gap insurance in Florida works the same way as gap insurance in the rest of the U.S. It pays the balance remaining on a car loan or lease contract after a liability, comprehensive, or collision policy pays out the actual cash value of a totaled vehicle. The state of Florida doesn’t require any driver to carry gap insurance. However, certain lenders in Florida may require customers to carry … read full answergap insurance – short for guaranteed asset (or auto) protection insurance – if they get a car loan or lease.
Dozens of companies, including banks and dealerships, offer gap insurance in Florida. While you should take your time deciding which one is right for you, you can also have confidence in the fact that gap insurance works the same way in Florida as in the rest of the country.
It’s worth noting that gap coverage is usually cheaper to purchase from an insurance company than a dealership. For more information, check out WalletHub’s complete guide to gap insurance.
Gap insurance is worth it for drivers who owe more on their car loan or lease than the car is worth. For example, if you paid a small down payment on your car, your loan term is 4-5 years, or your car will depreciate quickly, gap insurance may be worth considering. Gap insurance is never mandated by state law, and few lenders or lessors require it, so the decision to buy it depends on personal circumstances.… read full answer
Gap Insurance Is Worth It When:
You don’t have the savings to pay off your loan or lease if the car is totaled or stolen.
Your down payment is less than 20% of the car’s value.
Your loan will last four years or more.
You drive more miles than average, which reduces the car’s value faster.
Your car is a make and model that depreciates especially fast, like a luxury sedan or electric vehicle.
You are a single-car household and need a car to get around.
Your loan includes negative equity from your last car.
Since gap insurance covers the difference between the car’s actual cash value and the amount you owe, researching these two numbers will be a key deciding factor in whether gap insurance is worth it.
Why Getting Gap Insurance Is Worth It
For example, say you buy a car for $20,000 and your down payment is $2,000. This small down payment suggests that gap insurance might be worth it, but it’s still a good idea to check the car’s anticipated value after a year to determine if there will be a gap. If the car is worth $12,000 after a year but you’ll still owe $15,000, gap insurance could be a smart investment. If you don’t buy gap insurance and this car is totaled after a year, you’ll still owe $3,000 even though you can no longer drive it.
On the other hand, if your down payment is large enough or the car’s resale value is high enough that you’ll never owe more than the car is worth, gap insurance is unnecessary. Similarly, if you do owe more than the car is worth but you have the resources to pay the difference if the worst happens, it might be worth taking the risk.
No, gap insurance will not cover a totaled car without insurance unless the gap policy specifically allows it, which is highly unlikely. In most cases, you cannot purchase gap insurance or file a gap insurance claim if you don’t have collision or comprehensive coverage.
If you purchased gap insurance from a dealer but have allowed your car insurance to lapse, you are likely violating your contract. Gap insurance is really insurance for your loan or lease, not your car, and any reputable lender or lessor will require you to maintain … read full answerfull coverage on a leased or financed vehicle.
For more information, check out WalletHub’s guide to gap insurance.
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