Did you know that without gap insurance you run the risk of paying for a vehicle even if it is totaled? Fault or no fault, liability coverage or not.
Let’s face it, cars can be expensive. Tires and oil changes, insurance and registration, the cost is much more than just the loan payment. When budgets are tight, it can be tempting to cut back on a few features of your auto insurance policy, but the few dollars you save today could cost you significantly down the road.
Gap insurance, also known as loan-lease payoff coverage, is frequently included in full coverage policies, though it is typically elective. In the event of an accident, this insurance will pay the difference between the standard payout and your loan balance.
The insurance company will pay the actual cash value (ACV) of a vehicle, which is the amount determined by comparing your vehicle’s condition, mileage, and history with that of other vehicles. It’s similar to the Kelley Blue Book method of valuation. This amount is almost never the same as your loan, as your vehicle depreciates faster than most can pay it off. The difference between the ACV and your loan is your responsibility after an accident, unless you have gap insurance.
An auto accident is tough enough on your finances and emotional well being. Take a few steps now to minimize your risk and maximize your coverage. If you are ever involved in an accident, the Law Office of Scott M. Schweiger is on your side to make sure you get what you deserve.