GAP Insurance Benefits
Orlando, Fla .—ORLANDO, Fla.—Guaranteed Protection Insurance, also known as GAP, is an important consideration when purchasing your auto protection policy. This covers the difference between what you still owe on your vehicle and what your vehicle is worth if your car (leased or financed) is in an accident, totaled, or stolen.
Insurance companies determine the value of a vehicle by its actual cash value (ACV), not by what it was sold to or by any modifications or improvements made.
ACV is affected by depreciation values, which include:
- Vehicle make and model
- vehicle age
- duration of ownership
- First-Year Depreciation Estimate
Some insurers require that your vehicle be brand new in order for you to purchase differential insurance. This can mean:
- That you are the original owner of the vehicle.
- That the vehicle is a model that is no more than two or three years old.
Differential insurance is intended to be used in conjunction with collision coverage or comprehensive coverage. If you've paid off enough on your car loan and already owe less than its current value, then you don't need this type of coverage, since your collision and “all-risk” coverage may be all you need to pay off the debt for the car. stalled vehicle.
According to edmunds.com, on average, new cars depreciate 11 percent from the time they leave the sales dealer. After a year, it is worth 20 percent less than when it was new. This means that if you didn't put up much soon enough and included the billing fees and taxes in the financing, as is often the case, you could soon be owing more than it's worth. GAP insurance exists to provide additional protection in these early years when this typically occurs.
The costs can vary depending on the scoring system used by the different insurance companies, but it is usually calculated based on 5 and 6 percent of the cost of your physical damage coverage. If the cost of your collision and comprehensive coverage is $500, the cost of your GAP coverage would add about $25 to the premium. This may be offered to you directly at the establishment where you buy your car, but you always have the option of contacting your Buscando Seguro agents, who analyze and compare all the options available for your case, so that you can make one more purchase. intelligent.
After the vehicle is paid off, any unused portion of the premium is refunded. For example, if a vehicle is financed for 48 months but paid off in 24, then two years of premium must be returned to the owner, as this type of insurance is typically paid for in advance.
Here, your local specialists are here to help you. At Buscando Seguro, we specialize in facilitating all types of insurance coverage in the state of Florida as well as Georgia, Texas, and other states in almost the entire nation.
What Is Gap Insurance, And Why It’s Essential For Your Vehicle
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Different GAP insurance alternatives to meet your needs
There are different GAP insurance options available to cover the difference between the market value at the time the total loss occurs and:
- The outstanding financial balance/book value (the financial “difference”)
- The original invoice value of the vehicle or asset (the “difference” with the return according to the invoice)
- The full replacement value of the vehicle or asset (the replacement “difference”).
GAP Insurance can help you meet your business needs whether you're concerned with risk management, product improvement, or looking to increase your fee income.
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