What Is Gap Insurance?
When using an auto loan to purchase a car, truck, or SUV from Cactus Jack's Auto, the lender may require you to have certain levels of insurance coverage to protect the investment in case of an accident. This coverage may be different from what AZ requires. One aspect of auto insurance is called gap insurance. It’s an optional plan you can purchase to give you peace of mind if your vehicle becomes damaged in Mesa or beyond from certain circumstances.
Read our guide about what gap insurance does to learn more information. We’ll also discuss what gap insurance covers so you can make a decision about whether this kind of insurance is for you.
What Does Gap Insurance Do?
What gap insurance does is make up the difference between the value of your vehicle and the remaining amount of the auto loan. For example, you get an auto loan for a vehicle that costs $15,000 in Surprise. However, the loan itself is $20,000 due to interest. Gap insurance will cover the $5,000 difference between the vehicle value and the loan amount in case the vehicle becomes undrivable at some point.
What gap insurance covers goes beyond just an accident, which we discuss next.
What Does Gap Insurance Cover?
Gap insurance covers a variety of issues related to your vehicle in Glendale and elsewhere. Whereas liability coverage and comprehensive coverage are for an accident when the vehicle is being driven, what gap insurance covers can be for an accident and other things not related to an accident.
Gap insurance only covers damage to the vehicle, not to bodily injury. It is meant to cover the total loss of the vehicle.
Gap Insurance Covers
- Theft
- Fire
- Vandalism
- Accident
- Acts of nature (tornado, hurricane, flood, etc.)
Gap Insurance Does NOT Cover
- Deductible (though some gap insurance policies allow this)
- Engine failures and other mechanical repairs/malfunctions
- Death
- Extended warranties
Do I Need Gap Insurance?
No, you do not need gap insurance. However, it is highly recommended that you opt for this coverage when you need extra peace of mind. Gap insurance is especially helpful if your dealership, like a buy here, pay here dealership, offers a plan that includes deductible coverage. Our Phoenix finance team can help you navigate this type of insurance coverage ahead of talking to your insurance provider.
Explore All Insurance and Finance Options at Cactus Jack's Auto
Do you have more questions about gap insurance? Contact us or call (602) 443-5225 to talk to a member of our finance team. We’re also happy to help you find your perfect vehicle through our Phoenix used car dealership.