Insurance is a necessary part of our lives. We have insurance for our homes, health, cars, and many other things. Being covered is a great feeling! This is true for standard insurance, but even more so for extra supplemental insurance products that complement your full policy like Guaranteed Asset Protection, or GAP. So, how much coverage is needed and does it make sense for your specific situation?
What is GAP Insurance?
When you purchase a new or used car, you purchase car insurance that helps pay (depending on your specific coverage and the car’s actual value) for the replacement of your vehicle if it’s totaled or stolen and not recovered. The glitch is the actual value of the vehicle could be quite different than the value of the loan. Your car’s actual value is the cost of the car when it was new minus depreciation, age, mileage, condition, etc. Since cars depreciate quickly, the amount you receive from the insurance company may be significantly less than what you owe. GAP is an optional insurance policy that pays the difference between how much is owed and what your insurance company pays if the car is totaled or stolen and recovered.
Who Should Buy GAP?
GAP is primarily for those who are leasing a car, have a 60-month (or longer) term loan, have less than 20% down, or purchased a car that has a high rate of depreciation.
Is GAP Insurance Worth It?
Paying for extra insurance on a brand new vehicle often feels like it might not be worth it — you’re paying for protection for something that could potentially never happen. That being said, the cost of GAP is typically quite low. At Orange County’s Credit Union, we offer GAP for just $399 when you get an auto loan with us. So, is it worth spending a little more or taking a risk on potentially paying thousands of dollars to pay for the loan for a car no longer have?
To learn more about GAP insurance offered at Orange County’s Credit Union, please stop by any branch or call (888) 354-6228.