We’ve heard of gap insurance and how it can supposedly deal with the remaining portion left by your insurance company in case a car accident happens. For those who do not know what gap insurance is, let’s explain. It is what covers the difference between what you owe for the car and what the insurance paid for in case you car is in a bad accident and gets severely damaged. The question on most, if not all, insurance buyers minds is: gap insurance for cars, does it work? Most insurance buyers will assume that it does not and is just a waste of money, but is it really?
The thing with gap insurance is that while it covers what is left of what you owe, it also depends on how bad the damage is and how much you paid for or owe for the car. It is thus very important that you list the pros and cons and weigh your decisions as to whether you really do need to obtain it. Now, if you were not able to make a hefty amount of down payment for the brand new car that you purchased, then the answer to your question if gap insurance is worth it, will be an affirmative. This is where gap insurance comes in. It will pay for the amount which you still owe when you bought your brand new car for minimal down payment. Do note that depreciation largely affects the value of your car. For those however, who were able to make a large down payment for the cars that they bought, there may be no reason to acquire gap insurance. Obtaining one will only affect your resources and waste your money.
To further explain, let’s say, you recently just bought a car for the amount of $29,000 and accidentally drive it into a ditch, causing damage which costs more than what you paid for. The insurance company pays for $25,000 but you are still $4,000 short which you owe the car dealer for when you bought the car. If you have gap insurance, the gap insurance company will pay for the remaining amount which is still quite a hefty sum. In this case, gap insurance for cars does work. And it has helped save you a great deal of money which you would have probably had a hard time paying for.
Just make sure that before you sign along the dotted line, you have read the fine print and understood every policy of your insurance so that you are able to use gap insurance if there is a need for it.