GAP or Guaranteed Asset Protection insurance is an insurance that is sold when you purchase a new car. The insurance covers the difference between the actual amount you paid and the present value of the car when your car is totaled or stolen. So, is it actually worth buying? Keep reading to find out.
What Is Gap Insurance?
Though your auto insurance is entirely all-inclusive, you still lose some money when your vehicle is totaled. This is due to depreciation. Which means, new vehicles lose their worth very quickly. According to a reliable source, on an average, a car loses up to 60% of its value within 3 years.
For instance, let’s assume your car cost $10,000. If you give it off after 3 years, you will get its present value approx. $4,300 only, from your insurance agency. That’s not sufficient to purchase a matching new car, and not likely to be adequate to pay off your loan from your deal.
GAP insurance is aimed to cover the difference between what your insurance company