No matter if your daily driver is new or pre-owned, it’s crucial to ensure you have the proper insurance to keep yourself and your passengers safe and covered on the Corona roads. So, what happens when you get into an accident? How does GAP insurance work after a car is totaled?
If your car is totaled, your regular insurance policy will make a payout based on your car’s current value. In some cases, this amount will be less than the amount owed, and this is when GAP insurance comes in. Take a closer look at how GAP insurance works below and feel free to contact us with any questions.
Example:
If you took out a loan of $25,000 and your vehicle was valued at $22,000 at the time of the accident, you would only receive $22,000 from your primary insurance policy. The GAP insurance policy would then step in and cover the remaining $3,000 so that you could pay off your vehicle.
“Totaled” and “wrecked” are often used synonymously, but totaled has a specific meaning.
When a car is totaled, the damage is so severe that the cost of the auto repair bills would exceed the car’s worth. It can also mean the damage costs exceed the better part of the car’s worth—usually 65-70% or higher. It’s a good idea to talk to your insurance agent about what a total loss is, according to your insurance company.
If you’re unfamiliar with GAP insurance, it’s useful if you’re paying on a loan and it amounts to more than your car’s worth. This gap between the initial loan and the current value of your vehicle exists because once you drive a new car off the lot, the value of the car depreciates, which means the value starts to drop. In the event of an accident around Ontario or anywhere else, GAP insurance helps cover the gap between what you owe on your loan and what your car is valued at. This could potentially save you from paying thousands on a car you no longer even own.
We know it can be an overwhelming process trying to find the right coverage for your Riverside lifestyle. If you have more questions about how GAP insurance works and want to discuss your options, don’t hesitate to reach out to our Murrieta finance center team. We’ll be happy to assist you.
