GAP insurance can help prevent you from owing on a car loan if you were still paying for your vehicle when it was totaled in an accident. Here is what you need to know if you’re affected by this legal issue after a truck accident in San Antonio.
What Is GAP Insurance?
GAP stands for Guaranteed Auto Protection. This type of insurance covers the difference between the value of the vehicle and the amount remaining on a loan or lease for it if it is declared a total loss after a crash. It generally allows the remaining debt to be forgiven so that you are not stuck paying on a loan for a non-functioning vehicle. This insurance is not mandatory. People generally purchase it when they purchase the vehicle.
How GAP Insurance Coverage Works
If your vehicle is declared a total loss, the insurance company would generally provide a check to you for its market value. However, in many cases, people are underwater in their finance agreements; they owe more on the vehicle than its market value. If they get in an accident that results in a total loss of the vehicle, the insurance check would go to the finance company, and the owner would still owe the remaining balance on the loan.
For example, if your vehicle’s market value is $10,000, but you still owe $15,000 on the loan, you would still be legally responsible for the remaining $5,000. And, you would still be without the use of a dependable car.
GAP insurance covers the difference between what you owe on the vehicle and the amount the insurance company pays for its market value. A claims adjuster generally determines the market value.
Purchasing GAP Insurance
To get this type of coverage, you would need to purchase it before you get involved in a crash, usually at the time you purchase the vehicle. It is not a mandatory form of insurance, so you won’t have it unless you proactively purchase it.
Not everyone needs or wants GAP insurance. If you are close to paying off your loan or don’t owe anything on your vehicle, you probably don’t need it. However, GAP insurance is recommended in certain situations, such as:
- You lease or finance a car with a loan of five or more years.
- Your down payment is less than 20% of the cost of the vehicle.
- You have negative equity due to a previous loan rolled into your new loan.
You can purchase GAP insurance when buying your vehicle from the dealership or through a licensed insurance company. Carefully review the terms and conditions of the policy you are considering purchasing, including:
- The total cost of the coverage
- The number of months or years the policy applies
- How to file a claim with the insurance company if you need to
- How much time do you have to file a claim after your vehicle is declared a total loss
Contact Us for Help with Your Accident Claim
If you were involved in a motor vehicle accident that triggered your GAP insurance, this could indicate that you may have the legal right to pursue compensation for another driver for the losses that you suffered. Contact George Salinas Injury Lawyers today for help with your San Antonio accident claim.