subject: Gap Auto Insurance Coverage: Can You Afford To Pay For The Same Car Twice? [print this page] Ive been preaching the gospel of GAP auto insurance ever since my sons SUV got stuck on a boat ramp and was swallowed up by the incoming tide.
Its one thing to kiss your car goodbye, but quite another to find out you still owe the bank $6,400, as in the case of my son, even after the insurance company payout.
Now if youre reasonably well off you could afford to take the hit and move on. But if youre just starting out on your own, or in a precarious financial position, it could set you back for years to come.
Can you imagine how youd feel struggling to make payments for 2 or 3 years on a car youll never see again while at the same time trying to pay for its replacement?
Just to drive the point home, I would like you to read this comment appearing in InjuryClaimGuide.org from a young lady who just lost her car.
Hello again. I was involved in an auto accident on monday. The other driver was found at 100% fault. My insurance is helping me claim uninsured motorist expenses and are filing a lawsuit for time missed off work and medical injuries.
Theyre paying me what my car is worth, but unfortunally, its not enough to cover all of my loan (its off by about $2000 or so).
This is not good. It means I have to pay that off before I can buy another car. Which will take, quite possibly, another year to do!
I need a car! Its how I workits how I live! Is there anything I can do? Can I sue for the rest of the money? My car is how I work (Delivery driver for papa johns) so without it, Im not making nearly as much money as before. Theres got to be something I can do to help me buy a new car and get back on my feet!!!!!
Thanks in advance.
Unfortunately, the chances of her collecting the $2,000 she so desperately needs are practically nil.
The real tragedy here is that she was probably unaware her car loan was upside down in the first place. And even if she did know, I doubt she was aware that an inexpensive Gap insurance rider on her policy would have paid the $2,000 difference for her.
And shes not alone. Another vulnerable group of car owners are those who put less than 20% down on a new car purchase. Since just about every new car loses 30% of its value during the first year of ownership, the amount owed to the bank or finance company would exceed the actual cash value of the car for at least the first 3 years of a 5 year car loan.
In this era of 0 down car loans, many unsuspecting new car owners are leaving themselves wide open for a real, but avoidable, financial calamity.
The solution to this problem is easy and affordable. The best, and least expensive, way to purchase a Gap policy is through your existing auto insurance carrier. If they dont offer it find an insurance company that does - especially now when every auto insurance provider known to man is offering to save you hundreds of dollars if you switch companies.
Typically, adding gap insurance to a policy costs only 5 or 6 percent of comprehensive coverage, or $20 - $30 a year. This is a far cry from the $500 $700 that dealerships and finance companies are asking for the same product.
by: Sam Streubel
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