Florida Auto Accident Attorney Explains Gap Insurance and How it Relates to Your Car Accident
Standard auto insurance policies cover only the depreciated value of a car. In other words, a standard policy pays the vehicle’s current market value at the time of a claim, which is typically far less than its replacement value. Therefore, when you put down only a small deposit, your auto loan may exceed the car’s value. This is what is meant when someone says you’re “underwater” on your automobile financing loan. However, gap insurance may be the answer to your problem.
If you have suffered property damage, been injured or lost a loved one because of an automobile or trucking accident, a Florida auto accident attorney at Searcy Denney can help you with your insurance and legal claims and ensure that you understand the function of gap insurance.
What is Gap Insurance?
If you’re underwater and become involved in an accident that has badly damaged or totaled your car, gap insurance, also known as “loan/lease gap coverage,” covers the difference between what a vehicle is currently worth, or simply put, what your standard insurance policy will pay, and the amount you actually owe on it.
When Would I Need Gap Insurance?
Gap insurance may be a good idea if you:
- Financed for 60 months plus
- Made less than a 20% down payment
- Bought a vehicle that depreciates faster than most
- Leased the vehicle. Gap insurance is usually required for a lease
- Rolled negative equity over from a previous car loan into the new car loan
How Does Gap Insurance Work With Respect to an Accident?
Let’s say you buy a brand-new car for $75,000. Unfortunately, you’re involved in an accident that totals your car while you still owe $60,000 on your auto loan. Your collision insurance would pay your lender the totaled car’s depreciated value — let’s say $50,000. However, if you don’t have gap insurance, you would have to pay the remaining $10,000 out of your own pocket on your auto loan for the totaled car. But, if you have gap insurance, your insurer would help pay the $10,000.
What Does Gap Insurance Cover?
Generally speaking, gap insurance will cover theft and negative equity. However, gap insurance will not cover deductibles, death, bodily injuries, medical expenses, lost wages, funeral costs, or mechanical repairs, even if the car throws a rod or the engine is otherwise rendered entirely useless.
Our Florida Auto Accident Attorney Understands How Gap Insurance May be Used if You’ve Been in a Car Accident
If you’re underwater on your car loan and total your car, gap coverage will come in very handy. If you’ve been involved in an accident and have gap coverage, a Florida auto accident attorney at Searcy Denney can help. We offer free consultations and work on a contingency fee basis, with no risk to you. Contact us to discuss your claims during your free consultation.