Chicago Illinois Auto Insurance - GAP Insurance

If your car is stolen or totaled in an accident, will your insurance company pay for what you owe the lender or leasing company? For most people, the answer is maybe. Depending on how you financed your car, you may also need a relatively little-known form of coverage called GAP (Guaranteed Auto Protection).

GAP insurance covers the gap, or difference, between your car's actual value and what you still owe on it.

Why do you need it? Your car depreciates about 11 percent as soon as you drive it off the lot, and it continues to depreciate significantly for the first two or three years. If your car were to be stolen or totaled during this time, insurance companies reimburse you for actual cash value (ACV) of your car. Your loan amount could be significantly more... leaving you on the hook for the difference.

For example, if you pay $40,000 for a new car and a few months later it gets totaled, you could still owe the lender more than the $36,000 that it may now be worth. Post accident, your insurance company is only obligated to reimburse you for the $36,000 Actual Cash Value. You would be responsible for any difference. GAP insurance will provide the needed protection for this type of loss.

Who Needs GAP Coverage?

GAP coverage is highly recommended on a new car for consumers who:

• Make a down payment of less than 15 percent.

• Finance for 60 months or more.

• Finance or lease a vehicle that depreciates very quickly like luxury cars.

• Lease a vehicle.

Dan Zeiler

dan@zeiler.com

877-597-5900 x134