Gap coverage adds more protection to your auto policy
Gap coverage is an optional coverage for newer cars that can be added to your collision insurance policy. It may pay the difference between the balance of a lease or loan due on a vehicle and what your insurance company pays if the car is considered a covered total loss. Without proper coverage, the gap between what you’ve paid and what you owe can be substantial.
Your lender may require gap coverage
If you financed your vehicle with a car loan, your lender might require loan gap coverage in addition to your collision and comprehensive coverage. If you lease your vehicle, lease gap coverage may already be included in the cost. Check your coverage paperwork to be sure.
Actual cash value determines how much your policy pays
Standard comprehensive and collision car insurance policies help pay for the replacement of your vehicle if it’s a covered total loss – up to the limits of your policy and the car’s actual cash value. ACV is equal to the cost of the car when it was new, minus depreciation for age, mileage, physical condition and other factors. After just a year, the ACV of your car can be thousands less than what you paid for it, which can leave you with an expensive loan or lease balance. Nationwide’s gap coverage may cover some, or all, of that amount. This coverage is available in select states and applies to vehicles 6 years old or less. Let’s say your car cost $35,000 when new, and you currently owe $30,000. If the car is totaled, the ACV of the vehicle may be only $25,000. You have a deductible of $500, so the car accident settlement is $24,500. Your gap coverage may pay the remaining $5,500 on the loan instead of having to come up with the money yourself.
What does gap coverage cover?
The basic concept behind gap coverage is easy enough to understand – but what exactly does it cover? Gap coverage is quite versatile, but be aware that it only covers damage to your vehicle, not other property or bodily injuries resulting from an accident. Here are a few common questions related to gap coverage.
Does gap coverage cover theft?
Yes, gap coverage may cover theft in the event your car is stolen and unrecovered.
Does gap coverage cover deductible costs?
YES!! Gap covers the deductible up to $1000.00
Does gap coverage cover engine failure?
No. Gap coverage is only used in the event of a total loss from a covered accident, not for mechanical repairs.
Does gap coverage cover death?
No. Gap coverage is only applicable to vehicle losses and does not cover bodily injuries, medical expenses, lost wages or funeral costs.
Does gap coverage cover negative equity?
Yes. Negative equity is another term for the gap between what you owe on your auto loan and the car’s actual value.
