02 Aug Buying Gap Insurance
Should you buy loan/lease gap insurance at the dealership or through your insurance agent?
If you’re like most drivers, then you’re counting on your standard auto insurance policy to kick in and cover all expenses if you should ever get in an accident. However, it’s critical to understand that your insurance is only going to pay out the current market value of your vehicle at the time of your claim. This can leave you with a sizeable gap to pay on your own if you owe more on your car lease or loan than what your car is worth at the time of the loss.
That’s why loan/lease gap insurance is an important consideration any time you are purchasing a new vehicle. As its name indicates, this endorsement is designed to cover the financial gap in the event your car is deemed a total loss.
When you buy a new car, auto lenders will often offer gap insurance at the time of purchase. However, we encourage you to be as diligent in researching your coverage options as you are when you are searching for the perfect new vehicle.
Gap insurance through the dealership is typically far more expensive than what you can get through your local independent insurance agent, like ICNE. In fact, depending on the make and model of your car, you can expect to pay $500 to $1,000 for gap insurance purchased through the dealership, and you may be required to pay this lump sum upfront. Whereas a knowledgeable insurance professional can help you find an affordable gap coverage endorsement option for just a few extra dollars a month added to your auto insurance premium.
In addition to saving you money, there are many other benefits to working with your local insurance professional versus the dealership when you are thinking about buying a gap coverage endorsement, including:
- There’s no interest. If you were to add gap insurance to your car loan or lease through the dealership, you could end up paying interest because the coverage will likely become part of the amount you are financing. You can avoid these interest expenses by getting this endorsement through your insurance agent.
- You can cancel coverage whenever you want. If you decide to purchase gap insurance through the dealership, you are stuck paying for this endorsement until you pay off your loan or lease. However, if you get coverage through your insurance professional, you will have the option of cancelling coverage any time you decide that gap insurance is no longer necessary; for example, you may want to end coverage when your loan is paid down enough that your vehicle is worth more than what you owe.
If you feel comfortable that you would be able to afford to pay the difference between the market value of your car at the time of a claim and what you still owe on your car with your own cash, then perhaps gap insurance isn’t the right choice for you. But, for most of us who have borrowed money to own or lease a vehicle, at least considering a gap coverage endorsement makes a lot of sense.
We welcome you to stop into any of our three convenient Massachusetts offices or contact us for more information about gap insurance and to get a free quote. The ICNE team is always here to help you make informed decisions about protecting your vehicles.
If you’re ready for a more personal relationship with a trusted insurance agent, and a whole new outlook on car insurance, call us today at (800) 243-8134.