Gap Insurance - Guaranteed Auto Protection (Aka gap waiver insurance).
Unless you put a large down payment on your new car, it will probably be worth considerably less than what you owe on it.
You should buy GAP insurance either as soon as you sign the contract or within 30-90 days of purchase (or you may not qualify for the coverage).
GAP insurance only covers up to a certain dollar amount and percent of the manufacturer's suggested retail price of the vehicle at the time of loss.
If you finance a lot of higher dealer profit options, even GAP insurance may not cover the difference.
There is usually no refund once your gap insurance policy has been in force more than 30-60 days.
Without GAP insurance, you may owe the lender more than you receive from your insurance company, if your car is stolen or "totaled" in an accident.
With GAP insurance, the insurer covers the gap between the actual cash value settlement from your insurance company and the outstanding balance on your vehicle loan.
Many GAP policies will also cover the deductibles on your standard auto insurance policy.
GAP insurance may be offered in your state as a commercial (group), personal or as an existing auto insurance policy add-on.
Commercial GAP insurance protects state and national banks and credit unions from losses on financed vehicles due to thefts or accidents.
When you finance a new car, ask your bank or credit union if they offer you a debt cancellation agreement, which may be insured by a commercial GAP policy.
You are most likely to be offered personal GAP insurance, especially if you finance your car at a dealership.
Choose GAP insurance before buying other options like pin-stripes or rust protectant coating.
Stay focused during the negotiation process and ask if the dealer offers GAP insurance and what it covers.
GAP insurance can be a one-time premium at the time of your vehicle purchase, or rolled into the amount of your loan.
Auto dealers can put a significant markup on your gap insurance policy. Consider an outside third party gap provider.
GAP insurance could cost you up to 5% percent of the vehicle´s sticker-price.
Only buy GAP insurance from a licensed property and casualty insurance agent well versed in the coverage.
When filing a claim for GAP insurance, you will need to file a claim form plus a copy of the police report and a copy of your insurance company's settlement check.
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