So what is GAP insurance and why do you need it? When you purchase and finance a vehicle, you will usually be given the option to choose GAP insurance, which stands for Guaranteed Asset Protection. This type of coverage protects you in the event that your car is totaled and you owe more than it is worth. For example, say you finance your car for 72 months, and after one year you have an accident. Your insurance company gives you an amount based on the current value of your car rather than what the value of it was when you purchased it. If the amount the insurance company gives you for your car is less than what the payoff is on the loan, normally you would be responsible for paying off the remaining balance. However, if you have GAP insurance, the issuing company covers the difference, or the gap, between what your insurance company pays and what you owe.
If you are like myself (who drives an RT Classic Challenger), you are an overly cautious driver, watching out for yourself and others. Confession time.... I have also never actually been pulled over before. So all that to say... why would an overly cautious driver who has never even been pulled over want to buy GAP insurance? To put it simply, accidents happen. Even the safest drivers have accidents, whether they were at fault or not. Weather is also a factor to consider. Unfortunately, one of the bad things about living in the River Valley is the unpredictable weather. We all remember the baseball-sized hail storm we had a few years back, the spring weather that brings trees falling on cars or even flooding, and the excessive wind/tornado damage. Your GAP insurance will protect you in these circumstances as well.
It seems that when situations confront you in a time like having a totaled car, you are paying for more than just a damaged car. You may have suffered an injury, or in the event of a storm your home may need repairs. GAP insurance usually costs no more than an additional $11 a month to have for the life of your loan, and it will give you peace of mind knowing that you have one less thing to pay for out of pocket.