When you’re buying a new car, you probably aren’t immediately creating scenarios in your head, imagining that you’re faced with theft or an accident which cause your brand-new car to get written off, but, actually, you should. While you’re driving from the dealership, happy about your new purchase, your car has already lost 11% of the value you just paid minutes ago, according to statistics. The best way to save yourself from the potential headaches and nerve-wrecking situations down the road is to plan ahead and get covered with GAP insurance.
What is GAP insurance?
GAP insurance, or Guaranteed Asset Protection, is the perfect way to additionally cover yourself in case your car gets written off or stolen. Even if you’re already insured, it doesn’t mean you’ll get the coverage you expect in these two case, and you have car depreciation to thank for that.
Every car loses value the minute it leaves the dealership, and depending on the model, you can lose up to 40% just in the first year, and up to 60% in the first three. In case your car gets damaged beyond repair, or somebody steals it, your insurance will cover you- but only for the estimated current value of the car. That means that you could face some serious money loss, and won’t get reimbursed for the actual price you paid for your car. Here’s where GAP coverage comes to rescue- its sole purpose is to bridge the gap between the price you paid for the car and the insurance company’s payout. This way, you won’t lose money and you’ll be able to replace your car with its equivalent, without having to use your personal funds to pay for the difference.
How much does GAP coverage cost?
To make things even better, GAP coverage isn’t expensive, it’s actually somewhere around 5-6% of the rate of your basic collision or comprehensive insurance. Roughly, when calculated, it would mean that you would be paying about $20 to $30 a year for GAP coverage, in addition to your basic insurance premium. When you think about it, it’s actually no stress on the budget to opt for additional GAP coverage, and it will really make your life easier in case you’re faced with before mentioned circumstances.
A cheap way to save big
Not only the premium rates won’t be stressing out your budget, GAP coverage in cases of theft or your car getting written off will be a life-saver, keeping your budget intact and saving you from spending thousands of dollars. It’s almost unreal that something that doesn’t cost that much could save you so much money in the long run, and keep you from paying a lot more for your car than you should.
It’s always best to be safe than to be sorry, so when buying a new car, always ask your insurance company about their GAP coverage, and make sure you’ll be prepared for any potential trouble down the road.