Andrew Kryder, Chicago car accident attorney and the founding partner of The Kryder Law Group, LLC Accident and Injury Lawyers, has developed an enlightening video series, Car Accident Property Damage: How-to Guide, to assist individuals dealing with vehicle damage from non-injury car accidents.
This series is a comprehensive guide, tackling different aspects of property damage. In this installment, we delve into the topic of Gap Insurance, optional coverage in an auto insurance policy. We’ll examine what it is and what gap insurance covers when a car is considered totaled.
This guide provides vital knowledge, enabling you to independently handle such scenarios with confidence.
In this Article
What Is Gap Insurance?
Andy begins, “A lot of people want to know what gap insurance is, and when it’s used.”
When a car insurance company declares a vehicle a total loss, he continues, “Gap insurance is basically used to pay the difference between the [actual cash] value of the car and what you may still owe on the car.”
How Does Gap Insurance Work?
He continues, “So as an example: let’s say your car is totaled and the insurance company is going to offer you $10,000. However, you still owe $5,000 on [your car loan from the bank]. So the $10,000 gives you your car back, but you still owe five more [to the lender]. ”
“The gap insurance is going to fill that gap by paying the difference between the value of the car and what you owe the bank—called gap insurance.”
Do You Have Gap Coverage?
Andy urges, “You want to look into that right away so that you have coverage. Look at your own policy, but then also call [the financial institution that made the vehicle loan]. Many times—baked into your monthly payment—is gap insurance, because the bank wants to make sure their collateral is preserved. Sometimes, as part of the auto loan payment, they’ve already purchased gap insurance on your behalf.”
“So check into that.” It can make a huge difference making sure that the loan balance you have on your car is paid off or not.