When you purchase a new vehicle, it’s exciting. Many people aren’t able to pay cash for new cars and default to financing. This is the reality for more people than not. If you have financed a new car and have full auto insurance coverage on it, you may feel like you are all set. After all, should you get in an accident where the car is deemed totaled, you would be covered right? It isn’t always so cut and dry. This is a subject that is worth taking a closer look at and is often when gap insurance comes into play. Signet Insurance Group is here to talk about gap insurance and why it can be important.
The Way Depreciation Plays a Role in Full Coverage
Even though you have full coverage on your vehicle, it may not be enough to give the coverage you need in the event of an auto accident. When you finance your vehicle, the process of depreciation happens the moment that you drive away from that dealership. Oftentimes, the rate at which your vehicle depreciates is faster than the process of paying the vehicle off. That means that you may not have as much coverage as you think you do.
How Gap Insurance Can Benefit Vehicle Owners
If a driver gets into an accident that renders their vehicle totaled, they are depending on their auto insurance to pick up the bill. Even if you have full coverage, there is a good chance you won’t get all the money you need to pay off your loan though. When the coverage is calculated, they are going to cut you a check for the value of the vehicle at the time of the accident. It isn’t for the total amount that you owe on the loan. Gap insurance works to make up the difference. You will get a check for that difference between the value and the loan amount. This can help drivers avoid getting into financial trouble should they get in an accident in their new car. When you’re stuck paying for a car that you no longer have possession of, it can be a bitter pill to swallow and financially devastating for some.
How to Determine if You Need Gap Insurance
The best way to know if you need gap insurance or not is to know exactly how much you still owe on your vehicle. Not only that, but you need to know how much your car is worth as well. If these two numbers are different, you may want to strongly consider gap insurance.
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If you’re looking for auto insurance that will have you covered in the event that your vehicle is damaged, you can turn to the professionals at Signet Insurance Group to find you the coverage you need at a price you can afford. We want to help you rest easy knowing that are covered should you get in an accident. Call us today!
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