Before starting, it’s good to know what GAP insurance is: this insurance covers the “gap” between what you owe and the car’s worth at the time of the accident. If you took out a $30,000 auto loan for your new Toyota vehicle, and it’s worth $27,000 at the time of the accident, you would get $27,000 from your auto insurance company. Your GAP insurance would then step in and cover the remaining $3,000 – so you don’t have to. Now that we’re clear on the terminology and the function this insurance serves, the finance team here at Beechmont Toyota can help you answer the question, “Do I have GAP insurance?”
Unlike liability insurance, GAP insurance is not a state requirement. In most cases, if you are interested in GAP insurance, you have to seek it out or actively ask for it and have it added to your car insurance coverage. However, there is an exception: when you lease a vehicle, your lease agreement may require that you have GAP insurance in case of a total loss.
Whether you’re financing or leasing your vehicle, don’t assume GAP insurance is required. In some cases — not all — car loan and leasing companies have a GAP Waiver Provision in their agreements with borrowers and lessees. Not sure if you have GAP coverage or the provision? Contact your lender or leasing company!
There are a few ways you can purchase GAP insurance. You purchase GAP insurance from your car insurance provider, an online insurer that specializes in GAP coverage, or from the finance team at Beechmont Toyota.
Before you buy the GAP coverage, consider the following:
Now that you can answer the question, “How do you know if you have GAP insurance,” it’s time to decide if this is the type of coverage that you need. GAP insurance is beneficial for lessees and drivers who still owe on their auto loans. If your loan is paid off, it’s likely not needed. Contact us if you have any additional questions or would like other tips like how to trade in your car!
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