Car Lease Gap Insurance
The importance of gap insurance should be known by any person that decides to lease a car, because if your car is stolen or completely damaged during a finance agreement, than the owner is obliged by the agreement to pay the finance company all the money that aren’t covered by the car insurance the driver has purchased.
Car lease gap insurance is of the essence if you choose to terminate the contract earlier even if you are obliged to do so because of objective factors. So, if the car gets stolen or you want out of the agreement you will have to pay a settlement figure that might not be completely covered by your insurance company. For example if the value of the settlement is around $10,000 and the insurance company covers only $8,000, you will have to pay the remaining $2,000 and that might not be a good news for your budget.
But this rule doesn’t apply only to car leasing, so you shouldn’t give up the leasing option. The same situation will occur if you decide to buy a new car and you need a bank loan or a HP. If your car gets totaled or is stolen is very likely that your car insurance company won’t cover all the money you owe to your finance company. This happens because of the depreciation factor. Usually, in the first three years of use a new vehicle loses 60% of its value. The solution that will save you the trouble is the car lease gap insurance.
Sometimes, gap insurance is required the moment you decide to lease a car, but that doesn’t necessarily mean that it will be included in the lease. If you think that you might have signed such an agreement, you should read carefully the papers or you can ask the leasing dealer if the car lease gap insurance is required and how it’s best to handle it: separately or by including it in the lease payments. But even if it’s not a requirement you should seriously consider purchasing one because of the reasons I already stated.
Gap stands for Guaranteed Asset Protection and it’s a type of full coverage designed to minimize your possible losses. If you want to purchase this type of insurance you should first check if it isn’t already included in your car insurance policy because there is no need to pay for it twice. If you need to buy it separately you should first of all shop around and check some quotes from different insurance companies. I know that it seems like an extra expense but you never know what it can happen. That’s the reason why many leasing dealers require even more insurance than the state’s minimum liability coverage and sometimes even additional collision and comprehensive insurance. That kind of insurance might be important if the gap insurance is included in your leasing agreement. That’s because many lease contracts stipulate that if you don’t buy that type of insurance you will not benefit from the gap coverage in case your car gets totaled or stolen. In fact, until you receive the insurance proceeds you will have to keep covering your car-lease payments.
So, if you think that leasing a car is the best option for you, make sure that you are protected against all the possible situations that are very likely to harm your budget. Car lease gap insurance might seem useless the moment you lease the car, but if there’s a possibility of have it included in your monthly payments don’t hesitate! Better safe than sorry!
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