Why You Need It
Statistically, the chance of your automobile being totaled is low, however, if it is damaged through an accident or some force of mother nature, this insurance will protect you from coming up with cash you don't have.
According to USA Today, 40 percent of car owners are upside down and have negative equity in their vehicles. That number rises each year due to the six and seven term auto loans compared to the standard five-year auto loan. Because a GAP policy will cover the difference between what your vehicle is worth and what you owe on it, for the few extra dollars it costs you a month or even if you purchase your own policy, you can be assured you will be able to payoff your auto loan. Most GAP policies will pay up to 130 percent above the vehicle's depreciated value.
This type of extra protection may not seem like something you need, but just as you would buy a car warranty or an appliance warranty, GAP insurance should be considered a valuable tool.
Before you purchase a policy at a dealership or used car lot, compare prices from companies on the Internet and make sure to ask questions. Find out exactly what the company will pay if your vehicle is totaled. Also ask if the policy will cover you for any reason, even mother nature disasters, and if your deductible will be paid.
Purchasing this protection should be judged as a necessity these days, especially as auto loans are longer in term to keep monthly payments at a minimum.