Everything Michigan Drivers Need To Know About GAP Insurance
What Is GAP Insurance?
Guaranteed Asset Protection or GAP Insurance, helps cover the difference in the value of your car at the time it’s totaled, and the balance owed on the loan or lease.
Fill In The Gap With Guaranteed Asset Protection
The second you drive your new car off the car lot; it immediately loses its initial value. Plus, another 20% – 30% within the first year you own it. And over time, you guest it, it loses even more till it is practically worth nothing.
Your standard Michigan car insurance policy will only pay out what your car is worth at the time of a theft or auto accident. In the event you owe more on your car loan or lease than what the car is worth, GAP Insurance will come into play.
How GAP Insurance Works?
If your car is totaled or stolen, GAP insurance helps cover the payout from your comprehensive or collision coverage.
Some plans will also help cover your insurance deductible. This is the amount minus the payment for a comprehensive or collision claim.
AAA, Nationwide, and Citizens all offer GAP insurance. You can talk to your local Michigan Compass Insurance agent about any stipulations or questions you may have.
How Do I Get GAP Insurance?
Compass Insurance helps many of our clients with GAP Insurance. We make sure our clients understand there are three ways they can purchase Guaranteed Asset Protection coverage.
- Include it in your regular insurance payment from your auto insurance company
- As a one-time fee through a dealership or lender- this may also be rolled into your loan payments
- As a one-time fee through a company that only sells GAP insurance.
Many of the insurance providers that Compass Insurance Agency represents offers GAP coverage, however it must be purchased within 6 months of buying your car (some restrictions may apply in the state of Michigan).
How Much Does GAP Insurance Cost?
The pricing on GAP insurance can vary dramatically based on the value of your car, your driving record, accident history, the address of where the car is kept and the insurance company providing the coverage.
Buying a new car is a large investment for anyone. This merits having your insurance reviewed and see what coverage and cost best meets your needs.
Some lenders charge a flat fee of $500 to $5,000 for GAP Insurance if you finance your car through a credit union. No matter what you decide, if you add the coverage on your loan, you end up paying interest on it.
If you decide to purchase standalone GAP coverage, it typically costs between $200 to $5,000.
The best bet is to add GAP coverage to your auto policy. You’ll only need it for the years where the amount you owe on the car is greater than the car’s value.
When Should I Get GAP Insurance?
- If you made a small down payment on a car, or no payment at all.
- If you agreed to a loan term longer than 48 months.
- If you drive a lot. This quickly reduces the car’s value.
- If you leased your car.
- If the purchased car depreciates in value faster than average.
Get GAP Insurance Today!
To add GAP insurance to your current auto policy, make sure you call Michigan’s TOP insurance company today, Compass Insurance Agency at 616-965-6272!