GAP Coverage Plan
Do I Need GAP Insurance?
When it comes to insuring your new vehicle, we know you want to be fully protected from the unexpected. If you’re considering additional insurance, we’re here to help you decide whether you need added coverage and what benefits you can expect from a GAP insurance plan. Here at Krause Auto Group, we’ve helped many customers from Atlanta, Woodstock, Duluth and Kennesaw make decisions about their vehicle insurance coverage, and we want to help you too! Keep scrolling to learn about what GAP insurance is, what situations it applies to and how it can help you.
What is GAP Insurance?
GAP insurance, or General Asset Protection insurance, covers the difference between what your car is worth and how much you still owe on your vehicle (according to Car and Driver). This is different from the automotive insurance everyone is required to purchase. GAP insurance is an add-on plan that we highly recommend for those who still owe money on their vehicle loans. It can be extremely helpful in the event that your vehicle is totaled in an accident, because while your regular insurance will only cover what the vehicle is worth, GAP insurance will cover the amount you still owe. In the aftermath of an accident, you don’t want to have any unexpected bills pop up. Having the peace of mind that GAP insurance provides is priceless.
Let's Look at the Numbers
Table from WalletHub’s “Gap Insurance Guide” article. Click for more details.
When Would GAP Insurance Apply to Me?
While GAP insurance is helpful, it’s more useful for some drivers than others. Here are the situations where additional insurance would be the most effective.
If you paid a small down payment and took out a large loan.
If your down payment was small and you subsequently had to take out a large loan, there will be a large gap between what you owe and your car’s value (which depreciates quickly after purchase)
If your loan terms are fairly long.
If you have a long loan term, you’ll be paying off your car for years. For example, the average car loan term is 72 months, according to Experian Automotive. While you’re making small payments over a period of years, your car is depreciating, so by the time you finish paying off your vehicle, your car may be worth less than you paid for it.
If you purchase other service plans or add-ons at signing.
When you bought your car, you may have purchased an extended service agreement or another plan offered by your dealer at signing. This can add to your loan amount without increasing your vehicle’s value. Your loan amount can also increase due to debt from a previous auto loan that was bundled with your new one after you traded in an old car.
If you know your car will depreciate quickly.
Did you know that some vehicles depreciate faster than others? It’s more likely that you’ll be “upside down” on your loan — meaning you owe more on your car than it’s worth — if your vehicle has a high depreciation rate. Check Edmunds or Kelley Blue Book® to get an estimate on how fast your vehicle will lose value.
If your model has high mileage.
High mileage brings down your vehicle’s value quickly. If you drive more than 15,000 miles a year, consider getting GAP insurance.
If you leased your car.
You may already have GAP insurance if you leased your vehicle, due to the fact that you pay less on your loan’s principal every month. If you’re interested in leasing a new car from one of our dealerships, check with us to find out if your lease will include GAP insurance.
If you're interested in learning more about GAP Coverage or would like to purchase a new vehicle, contact us or stop by one of our Krause Auto Group dealerships. As always, we look forward to serving our customers from Atlanta, Woodstock, Duluth and Kennesaw.