You already have enough to worry about when paying for a car and getting insurance. But what’s this gap insurance all about? While the ins and outs can be tricky, this type of coverage is important to understand.
At Fields Volvo Cars of Daytona Beach, we want to make sure you know what you’re getting into. What follows is a deeper look at what gap insurance is and if you need it.
What Is Gap Insurance?
First, you may have heard that your new Volvo car loses value as soon as you drive it off the dealership lot. This means that what you owe on the car loan could end up being more than what the car is actually worth at a given time. That difference is what the “gap” refers to in gap insurance, though it actually stands for “guaranteed asset protection.”
When something happens to your vehicle, standard insurance will cover what the car is worth minus your deductible. But if your car is totaled (meaning it costs more to repair than its current value) and you owe more than it’s worth, gap insurance steps in to cover that discrepancy. If you don’t have gap insurance in this scenario, you’ll be in a tight spot.
Who Should Get Gap Insurance?
If you have a loan on your vehicle, gap insurance may be a good idea. If you owe more on your vehicle than it is worth, gap insurance is definitely a smart call. If your car ends up totaled and you don’t have this coverage, you’ll end up owing money with no car to show for it. Gap insurance ensures that you’re covered for whatever that gap amount is between what the car is worth and how much you still owe.
To learn more about your coverage options, call or visit our local Volvo dealers serving Palm Coast, FL. Our Volvo finance professionals are ready to assist you.