Should You Have Gap Insurance?

Gap insurance is an auto insurance policy that pays the difference between what you owe on your car loan and the value of your vehicle in the event of an accident or theft. 

If you're unsure if you'd benefit from adding gap insurance to your existing policy, you have a lot to think about. These are some signs you should add gap insurance to your coverage.

You Bought a New Car

If you just purchased a vehicle, especially if it's a new model, chances are that you're financing it. This means that if you're in an accident and your car is totaled, you might ultimately owe more than the car is actually worth.

In this case, gap insurance would cover the "gap" between your loan's balance and the value of the car, giving you peace of mind in the event of an accident.

You Have a Loan on an Older Car

If you're driving an older car that you still owe money on, gap insurance can still come in handy. While your car may not be worth as much as a brand-new model, you might still choose to finance it.

Gap insurance is especially helpful if you're "upside down" on your loan, which occurs when you owe more than the car is currently worth. In this case, gap insurance would cover the difference if your car was totaled.

You Have a High-Deductible Insurance Plan

If you have a high-deductible insurance plan, you may want to consider gap insurance. This is because if you're in an accident and your car is totaled, you'll be responsible for paying the deductible.

Gap insurance covers the deductible if your car is totaled, giving you one less thing to worry about. This can be especially helpful in a situation where you now have to buy a new car and worry about medical bills.

You Drive a Lot

If you put a lot of miles on your car, you may want to consider gap insurance. This is because the more you drive, the more likely you are to be in an accident. If you're in an accident, you won't be responsible for those extra costs.

Talk With an Insurance Agent

If you're still not sure if gap insurance is right for you, the best thing to do is talk with your insurance agent. They can help you assess your risk and decide if gap insurance is right for you.

Contact a local insurance company, such as ABC Insurance, to learn more. 

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