Why You Need To Think About Auto Gap Insurance

December 23rd, 2009 by Lloyd Pro Group Inc.

What is auto gap insurance and why should you seriously think about it?

Everyone knows that the moment your car drives off the new car lot that it immediately begins to depreciate. Depending on the year and model of the vehicle, some estimates put  that depreciation as high as 25%-33% of what you paid for the car.

Everyone knows that banks require that all new cars have Georgia car insurance. Now here is the magic question… Let’s pretend for a moment that you are in a car accident and your brand new vehicle is completely totaled. The insurance company is only going to pay you for the depreciated “blue book” value. In other words they will only pay for what it is actually worth… not necessarily what you paid for the vehicle. Even worse, if you are “upside down” in your note, it might not even cover what you owe on your loan.

Let’s take an example for a moment. Let’s say you have a 3 year old car that you paid $26,000 for. You currently have a  $17,000 balance left on the loan. Your car is wrecked and the insurance company offers you the depreciated value of  $13, 000. Now you can see there is a “gap” of $4,000 between what the insurance company will pay and what you actually still owe on the vehicle.

What does this mean? It means that you still have to pay off the $4,000 even though you no longer have a car to drive. Think for a moment how frustrating that would be to find yourself in that situation.

How gap insurance helps you to fill the “gap”

This coverage helps to close the “gaps” that are left when people find themselves upside down in their loans. Before you think that this doesn’t apply to you you may want to look up your car on the kelly blue book website. This wonderful resource shows what your vehicle is actually worth if you needed to sell it. Most people are frustrated to see what their car is worth compared to what they still owe on their automobile. Now you can see why gap insurance makes sense if you have several years left  to pay on your loan.

If you would like to learn more about gap insurance then you can contact Lloyd Pro Group at (770) 381-5000

Nationwide Insurance and  Lloyd Pro Group an Atlanta insurance agency, have been helping protect what matters most to their clients since 1985.  They can be reached at (770) 381-5000 or at their website http://www.lloydprogroup.com

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