What Is Gap Insurance? From Your Tampa Automobile Accidents Lawyer

During our years of practice as an automobile accidents lawyer in the Tampa Bay area, we have met with many clients who do not have gap insurance or don't know what gap insurance is. This is unfortunate, since gap insurance can save drivers a lot of money in losses after an automobile accident.

What is gap insurance? In the event of an auto theft or accident, gap insurance reimburses you for the “gap” between what you owe on your car loan and what your car is actually worth. Gap insurance exists because new cars depreciate quickly, leaving people “upside-down” on their new car loans for the first couple years. If your new car is stolen or in a total-loss accident, your insurance company would only be responsible for covering the market value of your car, leaving you responsible for paying the balance on your new car loan.

Upon request, most insurance companies can include gap insurance in your car insurance policy. Gap insurance is typically only written for new and leased vehicles. How does it work? Let's say, for example, you drive your new $30,000 car off the dealer's lot. Immediately, your new car's value may depreciate as much as 20-30%. That's $6,000-$9,000.

If you get into an accident within a few weeks and your new car is totaled, you still owe $30,000 on your new car loan, but your standard car insurance policy would only be responsible for paying the market value of your car, about $21,000-$24,000, toward your auto loan. Gap insurance would pay the remaining $6,000-$9,000 that you still owe on your car loan. While gap insurance is not usually required when you purchase a new car, we recommend that everyone ask their insurance agent about gap insurance.

Tampa automobile accidents lawyer Dale Appell, P.A. is here to improve the lives of those wrongly injured in car accidents. For more information about receiving a just settlement after your automobile accident, please call or e-mail us today.