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Gap Insurance

It's exciting to buy a new car, and we all know how important it is to get insurance for your new investment. But a new car loses value as soon as you drive it off the lot.

What happens if you have an accident or your car becomes a total loss? Your Car Insurance policy will likely pay for only the market value of the car. What if there's a high outstanding balance on your loan?

Your regular Car Insurance policy typically will not cover the difference, and even though the car is no longer yours, the money you borrowed to pay for it is. How will you pay off the balance of the loan?

The difference is called the shortfall, and this can be very expensive if you're unprepared. GAP Insurance, also known as Guaranteed Asset Protection Insurance is offered by insurance companies to protect your car in the above described situation - if it is under finance or a loan.

The "Gap" can be caused by a number of situations, besides the rate of depreciation:

  • Borrowing more than the purchase price. Taxes, tags, warranties and service plans can all be tacked onto your loan.

  • Financing your car alone is enough to cause a gap. Not putting a low - or no - money down can accelerate the depreciation.

  • High APR or long loan terms

  • Theft of the vehicle

  • If repairs cost more than the value of the car

Gap insurance can cover all sorts of damages and liabilities and leave you with peace of mind to enjoy your new vehicle.

You can often purchase Gap Insurance when you purchase your vehicle, and even pay for it right in your car note. However, if you didn't purchase it when you bought your car, you can always buy it after the fact. There are many tools available online to find the value of your car and help determine if GAP insurance may be necessary for you.

You can find many forms of Gap Motor Insurance: Finance Gap Insurance, Motorcycle Gap Insurance, Van and Truck Gap Insurance - even Motor-home Gap Insurance.

You can buy Back to Invoice Gap Insurance, which will pay up to the amount you paid for your car. This can be purchased for new or used cars, and policies can be found even if you have high mileage on your car.

Back to Value Gap Insurance, will cover you up to the value of the car the day you purchase the insurance.

GAP Insurance can be purchased through a dealer, a broker, or online. There are exclusions and restrictions which may apply, for instance if you have made modifications to the car, transferred drivers or ownership, use the car for hire. It is very important that you go through the Terms and Conditions, Policies, and Product of Disclosure, before signing up to anything to get a full idea of what you are paying for.

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