A fundamental car insurance policy may only pay the actual value of your vehicle, not the amount you owe on your loan or lease.
Gap insurance, also known as “surefire car protection”, will cover the difference between your truck and cars’ real value after devaluation. It will also cover any cash you owe in loan or lease payments. You might be required by your vehicle lender or lessor to include gap insurance in your policy. This will cover you for crash protection and comprehensive protection. It will also guarantee that you can spend the money on the lorry, even if the loan or lease ends.
After a claim, it can take between 5 and 45 business days for your vehicle insurer to pay the gap insurance. It depends on the complexity of your claim and your state’s guidelines. The exact time taken will vary. These payments are generally sent from your insurance company to the lienholder or lessor.
What is gap insurance?
Comprehensive and accident insurance, which will cover you for the actual value of your vehicle (or ACV), will pay you. However, the ACV also takes into consideration devaluation. Your automobile’s ACV may not be sufficient to pay the remainder of the lease or loan if it is being driven more than necessary.
Your lienholder or lessor will continue to owe you if the ACV of your vehicle is lower than what you owe on your loan or lease. Gap insurance will cover the difference between your vehicle’s ACV (or the amount left on your loan or lease), and your lienholder or lessor will receive the payment.
Let’s say you bought your vehicle for $20,000 and then it was totaled in a covered accident a year later. Your vehicle’s value will have decreased due to normal use. Your vehicle insurance might only pay $14,000. You still have payments to make on your automobile, even though you are only one year into your 2- or 3-year term. Gap insurance will cover you if the amount of money you owe on your vehicle exceeds the $14,000 value of your car and truck. This will allow you to finish the remaining payments and leave you free to rent or buy a new car.
What is the average time it takes for gap insurance to process? Most insurance companies will pay a claim within 30 to 45 business days. Gap insurance does not pay until the remaining claim has been settled. It fills the gap between the amount you received for the damage and the balance owed on your loan or lease.
Some states allow insurance providers to take up to a month before they agree to pay for the damages. Other states have different guidelines. Texas for example requires that payments be made within five days of an insurance provider agreeing to cover the claim. This means that gap insurance payments will take a different time frame depending on the state guidelines and the complexity of the claim.
Many insurance companies will allow you to check the status of your claim after it has been submitted. This is a good way to keep track of the current stage of your claim. A claims adjuster or agent will also be available to answer any questions you may have about your claim.
What happens to the gap insurance payout?
Vehicle insurance claims settlements can be sent to you directly or to a service center that repairs your vehicle after an incident covered by the policy. Gap insurance is a policy that covers the balance of the loan or lease. The payment would be paid directly to the lienholder or lessor, which will settle the remaining expense. This will leave you completely free to rent or fund another vehicle.
What is the best way to understand gap insurance?
Examining your statements page, which lists the coverage included in your policy, will help you determine if gap insurance is available. Call your insurance company to verify your protection information or access the files online.
Where can I purchase gap insurance?
Gap insurance is a protection that many insurance companies offer. You can choose to add it when you buy your policy. You can add gap insurance to your policy if you don’t have it and you finance or rent new cars and trucks.
Call your insurance company to make changes to your policy or increase your protection. You can also add chauffeurs or new cars to your policy online or over the phone. Many major insurers also offer an app that allows you to access and modify your policy from anywhere.
Additional automobile insurance coverage for trucks and cars rented or lent
Nearly all states in the United States require you to have minimum amounts of automobile insurance. This includes liability protection which pays for any injuries or home damage that your car causes. However, the requirements of your state are only a starting point. Your lienholder or lessor may require you to have greater than the minimum required vehicle insurance in your state.
Your lienholder or lessor may require you to add detailed and accident protection to the policy. Comprehensive protection protects your vehicle if it is damaged in non-driving circumstances like theft, severe weather conditions, or falling objects. Crash protection is usually paired with compensation. It provides financial defense if your vehicle crashes into another car, person, or property, regardless of who was at fault.
Compensation and crash protection protect your car and truck. They can also pay for expenses related to serious damage, but only up to your vehicle’s ACV. Gap insurance covers your vehicle’s remaining payments and the gap between the two amounts. This is a vital protection option to have when renting or financing a car.
Gap insurance vs. new automobile replacement
Gap insurance covers the remainder of your loan or lease. You can’t use that money to buy a new car or truck. The same make and model can be purchased, but you will need to add brand-new automobile replacement coverage, an optional extra that will cost more than the ACV.
Gap insurance is different from brand-new automobile replacement coverage. This is because gap insurance pays your lienholder the difference in between the ACV (and what you still owe in monthly payments). You get the difference between your ACV and the cost of replacing your vehicle with one that is comparable to yours. This allows you to go out and buy a new car or truck to replace your old one.
Only cars and trucks older than one or two years are eligible for new vehicle replacement coverage. You’ll want to add it to your policy as soon as you lease or finance a new car. It is sometimes offered by some insurance companies in combination and gap insurance. However, the cost of brand-new vehicle protection will vary from one insurance company to another.