Being in an accident is stressful enough, even minor fender benders, but the situation becomes even more problematic when your vehicle is totaled, meaning it can no longer be driven. The inconvenience of losing your primary mode of transportation in an accident can be overwhelming. However, the stress can be even further magnified when your car is deemed totaled while you still owe money on it. This scenario can feel like the ultimate burden, and put a big strain on finances when trying to afford a new car, while paying off the one you lost. Fortunately, GAP insurance can save the day if you have it, providing crucial financial relief when you need it most.
At Bear River Mutual, we understand the importance of Utah GAP insurance when you are still paying off your vehicle or leasing it. However, we also realize that many people are not familiar with GAP insurance or how it can help relieve the financial burden of a car payment after it has been totaled. That’s why we are committed to providing our community with all the information you may need about GAP insurance. Our knowledgeable team is here to explain the benefits of GAP insurance and ensure you are well-informed on your options when your leased or financed vehicle is totaled, giving you peace of mind and financial security in the event of an accident.
Jump to: What Exactly Does Utah GAP Insurance Cover? | How Do I Know I Need Utah GAP Insurance? | Does GAP Insurance Have A Limit?
GAP insurance, which stands for Guaranteed Asset Protection insurance, is an essential type of auto coverage for those leasing or financing a new car that covers the owed amount when it is stolen or totaled. Many lenders require you to have collision and comprehensive coverage on your car insurance policy when you finance or lease a new vehicle. Once the car is paid off, the owner can then determine what insurance they would like to have on the vehicle. GAP insurance is an optional type of insurance that is meant to be used in tandem with these coverages.
According to Kelly Blue Book (KBB), once a vehicle leaves the lot, its value begins to depreciate, and then loses 20% or more of its value in the first year. If your claim is covered under the terms of your insurance coverage, your collision or comprehensive coverage would only help pay for your totaled or stolen vehicle up to its depreciated value.
GAP insurance coverage becomes important if you owe more than the car is worth when your vehicle is stolen or totaled. A vehicle is determined to be totaled when repair costs exceed the value of the vehicle, which depends on Utah’s laws and your insurer’s discretion. GAP insurance is an optional type of auto coverage that is designed to cover the difference between the amount you owe on your auto loan and the amount the insurance policy pays if your car is stolen or totaled. For example, if you still owe $10,000 on your vehicle loan, but the collision and comprehensive auto insurance coverages value your vehicle at $7,000, then GAP insurance will cover the additional $3,000 that is owed on the loan.
However, it is important to understand that GAP insurance does not cover injuries or other damages related to the accident, nor does it cover engine failures that were not a result of an accident. While standard auto insurance only pays an amount up to the value of your vehicle, GAP insurance covers the financial loss you would suffer if your loan balance is higher than the vehicle was valued at.
There are several good reasons why you should consider adding GAP insurance to your standard auto insurance policy. You may consider adding GAP insurance for your new car or truck purchase if you encounter these circumstances:
Adding GAP insurance to your auto coverage under these circumstances is a smart choice and investment in the long run. While we never plan on having our vehicle stolen or totaled, having GAP insurance in place provides crucial financial protection in case it does happen.
It’s important to note that GAP insurance may have a coverage limit, meaning it may not pay the full amount you owe on your vehicle. This is typically dependent on the policy you choose to pay for. If you owe more than the GAP insurance limit, you’ll need to cover the difference out of pocket. Therefore, understanding the specifics of your GAP insurance policy is crucial to ensure you have adequate protection.
If you want a GAP insurance policy that will cover the full amount you owe on your vehicle, the best way to determine how much you should have covered is to contact our team at Bear River Mutual. Our team is always available to help you better understand how GAP insurance can help you, and which policy limit will ensure you will not be left with a financial burden in the event your financed or leased car is stolen or totaled.
