GAP Insurance Coverage
GAP's Got Your
Negative Equity Covered
GAP Insurance coverage will vary quite a bit from insurer to insurer and there are 5 extremely important questions to ask (below) before buying your coverage.
Unfortunately for consumers, most dealers I've seen will sell a very basic coverage, because the cost is less and they stand to make more profit.
I talked about the most you should pay in my buy GAP Insurance page and discussed some of the fees dealers charge for GAP.
I now wanted to discuss some of the extra benefits that are available in the top notch GAP Insurance coverages.
As you may already know GAP pays the deficiency between your insurance settlement and your negative equity auto loan in the event of a total loss of the vehicle.
What you may not know is that the best of the best will not only pay the deficiency (the GAP), but will also cover some very important extras.
5 Questions To
Ask Before You Buy GAP:
1. Is My Insurance Deductible Paid?
This should be included with most basic coverages, but it doesn't hurt to ask. In addition, you may also want to know how large of a deductible it will cover.
2. Will The GAP Be Paid, No Matter How Big?
Some companies will only cover a certain percentage of the value of the vehicle at the time of sale.
If you are rolling a lot of negative equity into your new loan you'll want to know this.
3. What's The AM Best Rating Of The Insurer?
I'd suggest only buying your GAP Insurance coverage from insurers that have an A- AM Best rating, or better. This rating shows the financial strength of the company.
4. Will My Payments Be Made While The Claim Is Being Settled?
This is important to know. You must know that you are still responsible to pay your lender (on the totaled vehicle) your scheduled monthly payments while the claim is being settled.
If you do not pay then you will be reported as being delinquent to the credit bureaus.
Keep this in mind, because without this coverage you may be forced to pay on the old vehicle as well as your new replacement vehicle.
5. Will I Receive Any Down Payment Assistance For A New Vehicle?
Some GAP Insurance company's will pay you up to $2000 that you can apply to the purchase of a new vehicle. They will usually require you to repurchase from the original dealer.
GAP Insurance claims can take as long as a few months to settle, so knowing things like whether or not they will make your monthly payments can be very important.
If you do need to file a claim be sure that you are timely in getting them any and all paperwork that they need.
Follow this link to learn more about GAP Insurance Coverage and to read an example of the benefits.
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