Auto Gap Insurance – A Small Bet That Can Pay Off Big



Posted: Wednesday, April 21, 2010

by Sam Streubel
Alternative-Heating-Info.com

If you've ever visited a casino you know what it feels like when a single pull on a slot machine favors you with the sound of clanging coins flooding down the chute. You keep playing hoping for another big payout but somewhere in the back of your mind you're resigned to go home with less than you brought along. But what the heck, you had a few cocktails, maybe got comped for a nice meal, and you "only" lost around $200.

So here's a proposition for you. What if I told you that most major insurance companies will pick up the gap in your auto insurance coverage - which could amount to thousands of dollars for a buy in of just $30 a year? Would you take the bet?

If you don't know how gap auto insurance is played, here's a simple explanation.

Most new cars bought with less than 20% down will depreciate, or lose value, faster than you can pay off the loan. So if your car is totaled within the first few years of ownership, chances are good you'll owe the finance company thousands of dollars more than the insurance company is obligated to pay.

The difference between what you owe (loan balance) and what the insurance company will pay (actual cash value) is the gap in coverage that gap auto insurance covers.

Additional reasons to seriously consider gap insurance are if you lease a vehicle, finance for 5 years or more, drive more than 15,000 miles a year, roll over the unpaid loan balance from a previous vehicle purchase, or purchase a car brand or model with historically high levels of depreciation.

But you won't be getting gap insurance from a car dealer for $30 a year. The average cost of gap insurance bought through a dealership is $587.

Another thing about gap insurance is you don't have to keep it forever. Once the actual cash value of the car equals the loan payoff amount you can cancel it because there's no more gap to cover.

Obviously a bet on gap insurance is one you wouldn't mind losing, but you'd sure be happy to collect if the odds went against you. And hopefully they won't.

Learn how to get the "edge" on your insurance coverage at Auto Gap Insurance Online.

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Top-level comments on this article: (1 total)
» left by Lorrie Davids
 2 years 37 days ago.
96 fans.
Until recently, Sam, I didn't know about gap insurance. We recently bought a new vehicle and decided to buy in. It is not hundred's of dollars through the dealer from whom we purchased, but added only $5 each month to the payment. $5 month for peace of mind. We didn't consult any other companies because until we purchased the vehicle, we were unaware that kind of insurance existed. We are OK with the price. Gap insurance is peace of mind. Anytime you buy insurance you are betting you will have a problem, the ins. company is betting you won't! Thanks for the heads up on a coverage many don't realize is available to them.
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