What is "Gap" Automobile Insurance and Why Do I Need It?


wiseGEEK Writing Contest

Gap automobile insurance is the coverage you need to compensate for the difference between what your vehicle is worth and what you owe. Now this only becomes an issue in the event your car is declared a total write-off by your insurance company. To illustrate the point I now will readily admit I am a hard-core penny-pincher from way back. With regards to automobile insurance I consistantly spend as little as I can legally and practically get away with or without depending on how you look at it. However, I don't remember ever having been offered or informed of the necessity or purpose of this type of coverage. I've been legally driving for longer than I care to admit so when the occasion to learn of the necessity of gap insurance transpired, it was like being blindsided by a Bilderberger. I was driving home from work exhausted and under- caffenated, a treacherous position to find yourself. I was momentarily distracted when I collided with the vehicle in front of me. The other vehicle had unexpectedly stopped in my lane of traffic, and thus, we met by accident that day. Depending on your insurance coverage and where you live, automobile collision and liability insurance typically covers damage to your car and injury to you and your passengers. As you may know, a rearend is always the fault of the driver in the rear no matter what the apparent circumstances may be. For example some idiot slams on the brakes for no apparent rhyme or reason. No matter the cause of the collision, the damage to your vehicle and the cost to repair it, is likely to be that which brings the whole issue of gap insurance into focus. To bring the point home, I owed $8000. due to the age and mileage of my vehicle, and the actual market value was closer to $4000. The estimated repair cost was $6000. So for insurance purposes the vehicle was a write-off (worth less than the cost of repair). Instead of repairing my car as I expected and hoped, my insurance co. offered me a check for $4000. to settle my claim, which I accepted. My dilemma was that this was far less than the $8000. I owed for the vehicle. Had I known about and purchased gap insurance prior to this event, this "gap" between what I owed ($8000.) and what the insurance value was($4000.), would have been covered. The moral of the story is always, always, always, inquire about and purchase gap insurance as soon as you possibly can when you purchase a vehicle. Ask your insurance provider for the details. The cost per month for this coverage is typically less than the cost of a tank of fuel, and should you find yourself in the same situation, it could save you thousands of dollars. Gap insurance is coverage for the differance of what you owe on your vehicle and what the insured actual value is (depending on the age and mileage of the vehicle, the value may be much less than what you owe). Happy motoring!

submitted by B. Pinney