Whenever you take out a loan to buy a new vehicle or are leasing a car, you need to buy “GAP insurance” in order to provide advanced protection. If for some reason you were to get into an accident and your leased vehicle got totaled, the GAP insurance would help cover the difference between the balance left on your loan or lease and the total value of the vehicle. So if you took out a lease and were making payments of $500 per month on your new $25000 car, and you were 1 year and 6 months into your payments when you totaled your car, you would still have some money to pay up.
Assuming you were 1 year and 6 months into your payments, you would have paid up $9000 towards your leased car. If you subtract this amount from the $25000 price tag, you would be down to $16000 that you still owed for the vehicle. Since you did not pay for the full amount yet, your GAP insurance would come in handy because it would be able to take care of the added costs. It is highly recommended that if you are still paying off or leasing a vehicle that you buy GAP coverage. If you didn’t get GAP coverage in the example that I described, you would be responsible for paying the $16,000 out of pocket instead of having insurance support.
Can I use one GAP insurance policy for all of my leased vehicles?
If you are leasing multiple vehicles, you need to buy a specific GAP policy for each one. You cannot combine vehicles on a single GAP policy because they will not have the exact same risk and details. Although you may be able to still work out a deal with your insurance company in regards to saving money per vehicle by bundling your policies and purchasing extra coverage, you will still want to find out the exact details by contacting them.
Each insurance company operates differently and there is really no telling what the price will be for your specific vehicle on GAP coverage. If you would like to get a free quote, use the tool at the top of the page and enter your zip code. You will get results based on the insurance providers offering the best deals in your area. After you have found a provider, ask them whether you will be able to purchase GAP insurance for multiple leased vehicles and whether you can save money by bundling under one policyholder. (Read more about car insurance for leased vehicles…)
What other types of insurance coverage should I buy with GAP insurance?
It is recommended that you buy both comprehensive and collision coverage in addition to standard GAP insurance. The reason that you should buy both of these types of coverage is so that you are protected from animal damages, theft, vandalism, and any damages resulting from collisions. If you get into an accident and don’t have collision protection, any damage that is inflicted upon your leased car (assuming you were “at fault”) is going to come out of your paycheck – unless you bought collision insurance. It is highly important that you get thorough protection for your new and/or used vehicle.
What types of damages can I expect GAP insurance to cover?
Most people wrongfully assume that gap car insurance can be used for repairs and damages – this is not usually the case. The time when gap protection kicks in is when you have completely totaled your vehicle. In other words, if you get into a bad accident and your car is no longer drivable – your gap policy will pay for the unpaid difference on your lease.
You should also know that gap coverage is void once your lease is fully paid. If you had been making payments for a long time and your lease is paid up, you now own the vehicle. Once you are considered the official owner, you don’t have to worry about buying gap car insurance coverage because there is no unpaid balance left.
Think of gap insurance as something you need for new vehicles that are being leased. You get it in order to prevent yourself from having to pay the price difference if your vehicle is beat up in a severe crash. Once again, if you would like to check out the best insurance companies for gap policies in your area, just scroll up to the top of your page and enter your zip code. The quotes are free!