Tag Archives: Totaled car refund
GAP insurance is vital automobile insurance type for people, who require having it. However, many people are of the opinion that they will get GAP refund for a totaled car irrespective of the car’s age and amount one owes over it, but the reality is something different from this. Let us find out below.
GAP insurance covers two types of people. The cover is available against the expenses of total loss for those who finance and those who lease. GAP is actually the differential value between your car’s actual worth and the amount you owe against it. In fact, the GAP occurs because of the depreciation. This is because of the fact that a car is considered as used one as soon as you drive it out from the dealership.
For instance, if you buy a car at $30,000, its price may drop to around $26,000 a couple of month later and if you made payments of $500 per month, then it means that you still owe $3,000 more compared to the actual worth. For many individuals, owing an amount more than the car’s value is just a proof of automobile ownership.
However, for people who encountered total loss such as if their car gets stolen or damaged in an accident, then owing more on the loan compared to the car’s actual value is a huge problem.
This is beause if the car is considered as complete loss when you are obliged to pay more than the actual value of your car, then your auto insurance firm will not disburse the loan in full. Instead, the firm will pay for your car’s ACV that is actual cash value. For some people, it means owing thousands of dollars on the loan for their cars that do not exist unless they brought GAP insurance.
If you disburse adequately towards your auto loan than the car’s actual value, then you do not require GAP insurance. In addition, if you possess collision and comprehensive auto cover, then you have all the cover to payback your loan. For example, consider that you owe around $12,000 on your car worth $18,000 when an irresponsible driver totals your car in a collision. You are not at fault here and thus, you file for a claim and your auto insurance firm pays the actual cash value or ACV. Here, the less deductible you have, the more beneficial it is.
Thus, we can conclude that GAP insurance will not help to pay for a totaled car. So, now you know that GAP insurance is imperative for the ones, who are financing or leasing and also are obliged to pay more than the car’s worth.