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You’re out in the market looking for a car. You stumble upon a new car, so you decide to finance the car. You’re at the dealership filling out the paperwork and the salesperson asks you if you would like to add gap insurance to your contract. Your question is “What is gap insurance?” and “Is gap insurance worth it?”
What is Gap Insurance?
Guaranteed Asset Protection (gap) covers the “gap” meaning the difference between what your insurance company will pay out and the amount of money you owe on your car loan at the moment of the accident which concluded in a total loss. Gap insurance helps you avoid paying out of pocket on a car loan after your car has been totaled.
You can also check with your car insurance company to see if they offer gap insurance. Usually, it is cheaper to purchase your gap insurance through your insurance company. Also, keep in mind not all car insurance companies offer gap insurance. Gap insurance is not a requirement when financing a car but there are advantages in purchasing gap insurance.
Is gap insurance worth it?
Usually, when you finance a car the retail price that is financed is greater than the vehicle’s current resale value. If this is the case purchasing gap insurance is worth it. Generally, you will need to purchase gap insurance for a few years until the gap between what you owe and what the car is worth closes.
Gap insurance is an important consideration when financing a car but that’s not where important choices on car insurance stop. When purchasing car insurance make sure you add PIP and UIM insurance to your coverage.
What is PIP insurance?
Personal injury protection (PIP) is additional coverage that you can purchase from your car insurance. PIP insurance helps cover medical expenses and lost wages which resulted from an automobile collision. PIP is also known as “no-fault” coverage because it pays out claims whether or not who was at fault in the accident. In Texas, it is required for insurance companies to offer PIP insurance coverage, but it is not required for the consumer to actually purchase the PIP coverage. After an accident, you should not hesitate to use your PIP coverage. Some people fear using the coverage because they think their insurance rate will increase if they do so but that is not the case. In fact, in Texas, it is against the law for your insurance company to increase your rate if you claim your PIP coverage.
What is UIM insurance?
Underinsured motorist insurance (UIM) coverage is also additional coverage that can be added to your car insurance. UIM pays for injuries, such as medical expenses, that results from an accident caused by a driver who has too little insurance to cover all of the injuries. UIM insurance is extra purchased coverage that will help you be insured if 1) the wreck and injuries are caused by another driver’s negligence or if you been a victim of a hit and run accident 2) the driver does not have enough insurance to cover the costs of injuries that they have caused.
You have several options to consider when purchasing car insurance. Make sure you are fully aware of your available options so that you can purchase the right coverage and avoid needing an Arlington, TX bankruptcy lawyer.
Contact Brandy Austin Law Firm for more insight into the benefits of Gap insurance.