What is Gap Insurance?

If you have recently bought a new car, then you need to know about gap insurance. In order to give you a better idea about car gap insurance, then imaging you have just bought yourself the car of your dreams. It is the car you have always wanted, it's brand spanking new and you've saved or financed it's purchase, bought it and driven it off the forecourt.

On the way home or within the first few weeks of owning your car, the unthinkable happens and someone totals your new pride and joy. Imagine your horror when you go to yout insurance company and they value you new car at 30% less than what you paid for it just a couple of weeks ago!

The truth about new cars is that they depreciate in value by up to 30%, depending on the make and model as soon as you drive it off the forecourt. This is a truth and is undisputed. When you have financed a vehicle, you don't want to hear that you will have to pay the difference between the load and the value the insurance company will pay out.

Even if you haven't financed the car, you will have saved a great deal to pay for it and if the valuation given by your insurance broker is much less than the money you paid for your new car, you are going to feel aggrevied. Quite simply Gap Insurance was created to solve this problem,

Gap Insurance Covers the Difference.

The difference between what you have paid for your car and the amount your insurance company says it is worth is covered by Gap insurance policies. Although each policy type is different and you will need to work and know the terms of your policy to ensure it covers all the eventualites that you may require, it is a good way to cover the difference of what could amount to a few thousand dollars.

Some insurance policies may have gap insurance included, however as with all insurance contracts, as we have already said, make sure you know the terms under which your premiums are being paid.

If you think you will e out of pocket in the case of a total loss, then auto gap insurance may be a good choice for you.