Most Mesa drivers don’t want to think about what will happen if they’re ever involved in a major collision, but an understanding of all the insurance options is crucial whether you’re looking for a new vehicle or a pre-owned model. GAP insurance is one option you might have heard about, so how does GAP insurance work after a car is totaled?
Well, if your vehicle is ever totaled you’ll get a payout from your insurance company based on its current value — but for people with auto loans, that often means receiving less than the vehicle is worth. GAP insurance steps in to cover the difference between auto loan and original payout. Need to find out more? Simply read on.
People often use the words “totaled” and “wrecked” interchangeably, but they have slightly different meanings.
If your vehicle is totaled around Surprise or Glendale, it means damage is so severe that the cost of repairs would exceed most or all the vehicle’s value. That said, it’s worth talking to your insurance company to find out exactly what they consider a total loss.
Okay, so how does gap insurance work on a total loss?
The “gap” refers to the difference between initial loan and the vehicle’s current value. In the event of an accident, the gap insurance will cover that difference to ensure you don’t end up paying off the remainder of the loan out-of-pocket.
For example, let’s say you took out a $20,000 loan to pay for a vehicle, which was then valued at $18,000 when totaled. You’d only receive $18,000 from your primary insurance policy, and you’d be liable for the remaining $2,000 yourself. With GAP insurance, that $2,000 would also be covered.
Whether you’re asking, “how does gap insurance work if your car is totaled?” or simply need more car buying tips, the team at your local Cactus Jack dealer will be happy to help. Simply get in touch today for any further advice or assistance.
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