LOS ANGELES, Jan. 26, 2020 /PRNewswire-PRWeb/ -- Buying a
brand new car is one of the best feelings a driver can experience.
But for some unlucky drivers, that feeling of joy doesn't last that
much. If a policyholder's vehicle gets totaled in an accident, or
it gets stolen the insurance company will only pay the actual cash
value of the car and not the price of a brand-new vehicle.
GAP, short for guaranteed asset protection, is an optional
coverage, that will cover the cost difference between the retail
price of a new car and the actual cash value offered by an insurer,
if the policyholder's vehicle gets totaled in an accident, or it
gets stolen. Depending on the insurance company, cars that are
seven years old or less are eligible for this coverage.
GAP insurance should be bought in the following
situations:
- When policyholders are financing a car that loses value
quickly. Many cars lose value quickly, but some models depreciate
very quickly. In some cases, certain models can lose as much 75% of
their value, after their first three years on the road.
- On long term loans. On short term loans, the gap between what a
policyholder owes on his car and the actual cash value will begin
to narrow and disappear much faster than on long term loans.
- When the down-payment is lower than 20%. In this case, the
policyholder owes to the lender more than the car is worth.
- Vehicle leasing. The lender will probably insist to purchase
GAP insurance, alongside collision and comprehensive coverage.
- If the policyholder drives a lot. Cars with high mileage
depreciate more quickly.
For additional info, money-saving tips and free car insurance
quotes, http://compare-autoinsurance.org
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SOURCE Compare-autoinsurance.org