Everybody wants to save money on car insurance, but some people make big mistakes in their efforts to cut corners and save a few dollars per month. According to statistics, one thing that drivers most frequently neglect to consider when comparing insurance costs from one provider to another is gap insurance. But what is gap insurance, and why do you need it?
Gap insurance gives you coverage if the amount of money you get reimbursed is far less than what you owe on a car. This is most useful in situations where you’ve been involved in an accident and the insurance company decides to total your car, which is always done at book value. If your car is brand new and you’re financing it through a lender, you’re still going to be stuck for paying them the full amount – but if the insurance company values your car at a much lower dollar figure, which is often the case with brand new cars that lose serious value the moment you drive them off the lot, the odds are you won’t get enough money from your insurer to cover the bill.
For this reason, experts strongly suggest pricing out gap insurance when comparing insurance policies, especially if your car is less than three years old and you haven’t had much time to pay it down. Once you’ve had your vehicle for a few years or have had sufficient time to pay it down to the point where you owe less than what it’s worth, you can drop the gap insurance coverage.
Tips on Staying Sane During the Insurance Claim Process
Combining home and auto insurance is a great way to save money, and it can also save you a bit of sanity— especially when it comes time to pay the monthly bill. But all of that peace of mind ...
Read More →
Do Wood Burners Change your Home Insurance Premiums?
If you install a wood burner or wood stove in your home, your homeowners insurance policy may need to be updated to comply with state insurance regulations. Laws vary from state to state, and it wo...
Read More →
Does Having a Trampoline or Pool Increase My Home Insurance Cost?
Before you put in a swimming pool or purchase a trampoline for your children, consider the additional cost to your home insurance rates. Coverage for a house that already has a pool is much higher ...
Read More →