How Do I Know If I Have GAP Insurance?

First, let’s answer the question, “What is GAP insurance?” GAP insurance helps cover the “gap” between what you owe on your car and what it’s worth should an accident occur. If you took out a loan of $30,000, but your car was valued at $27,000 at the time of the accident, you would get $27,000 from your primary insurance coverage. In this case, GAP insurance would step in and cover the remaining $3,000 — so you don’t have to. If you’re wondering, “Do I have GAP insurance,” the answer might not be obvious. Read on to learn more from the finance center at Automotive Avenues! 

Do You Have GAP Insurance? 

Unlike liability insurance, GAP insurance isn’t a state-required form of coverage for NJ drivers: it’s optional. In many cases, if you want GAP insurance, you have to actively ask for it/seek it out and add it to your car insurance coverage. There is an exception, though. If you’re leasing a vehicle, your lease agreement may require that you have GAP insurance in case of a total loss. 

Check Your Lease Agreement for GAP Waiver Provision

If you’re financing or leasing a car, don’t immediately assume you have to buy GAP insurance. In some instances — not all — car loan and leasing companies will include a GAP Waiver Provision in their agreements with borrowers and lessees. This provision will cover the gap between the amount you owe and what’s paid out by the insurance company. If you’re unsure if you have GAP coverage, check with your lender or leasing company to see if this provision is part of your agreement with them. 

How to Purchase GAP Insurance 

If you want to buy GAP insurance, there are a few ways to do so. You purchase it from your insurance provider, from an online insurer that specializes in GAP coverage, or from the dealership where you purchase or lease your car. Before you buy, make sure you consider the following: 

• Check with your insurance company to see if GAP insurance is part of your regular car insurance policy. 
• Again, some finance and lease companies include GAP insurance in with your vehicle or lease. If you don’t want GAP insurance, make sure you communicate this upfront. 
• Review your financing or leasing agreement to see if you already have GAP insurance. Ask if you’re not sure! 

Get Answers to Your Insurance Questions from Automotive Avenues 

Now that you know the answer to the question, “How do you know if you have GAP insurance,” it’s time to determine if it’s a form of coverage you need or if you’re fine without it. Typically, GAP insurance is most beneficial for lessees and drivers who are still paying on their auto loans. If you own your vehicle and it’s paid off, you likely don’t need it. Contact us at Automotive Avenues, or visit us near Howell Township or Trenton to discuss coverage for your leased vehicle today!