{"id":1594,"date":"2024-04-01T05:41:00","date_gmt":"2024-04-01T05:41:00","guid":{"rendered":"https:\/\/southern.confiedevstg.com\/blog\/?p=1594"},"modified":"2024-04-01T17:42:29","modified_gmt":"2024-04-01T17:42:29","slug":"gap-insurance-101-what-it-is-and-why-its-important-to-georgia-drivers","status":"publish","type":"post","link":"https:\/\/southern.confiedevstg.com\/blog\/auto-insurance\/gap-insurance-101-what-it-is-and-why-its-important-to-georgia-drivers\/","title":{"rendered":"Gap Insurance 101: What It Is and Why It\u2019s Important to Georgia Drivers"},"content":{"rendered":"
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You finally got that new car you\u2019ve been saving up for. You got it licensed and bought a full coverage <\/span>auto insurance policy<\/span><\/a>, complete with collision and comprehensive coverage. You\u2019re ready to safely and confidently hit the road.<\/span>\u00a0<\/span><\/p>\n

But are you? Are you fully insured against every bad chunk of luck that you and your brand-spankin\u2019 new car might endure? You\u2019ve got roadside assistance? Protection against uninsured drivers?<\/span>\u00a0<\/span><\/p>\n

You still might not be quite out of the woods. That\u2019s why you should read on and find out about car gap insurance and how it can more fully protect your pocketbook.<\/span>\u00a0<\/span><\/p>\n

What Is Gap Insurance and Why Do You Need it?<\/span><\/b>\u00a0<\/span><\/h2>\n

Gap, which stands for guaranteed asset protection, is a very affordable insurance plan that will protect your finances if your new or late model car is lost or totaled while you still owe more for it than the insurer says it\u2019s worth.<\/span>\u00a0<\/span><\/p>\n

There are times when your insurer feels it\u2019s cheaper for them to simply pay off your vehicle instead of going through the high cost of trying to fix it, regardless of whether you got into an accident with an <\/span>uninsured driver in Georgia<\/span><\/a> or otherwise. Or perhaps you don\u2019t even have a car to try to repair. It might have been stolen and never recovered or severely damaged by fire or even swept away in floodwaters.<\/span>\u00a0<\/span><\/p>\n

Whatever the situation, your finance company ends up with a check from the insurer for what\u2019s called the vehicle\u2019s actual cash value or ACV.<\/span>\u00a0<\/span><\/p>\n

Here\u2019s the rub. Because of depreciation (more on that later), that check sent to your lender still doesn\u2019t cover what you owe on the original loan. You end up on foot, with thousands of dollars still to be paid for that non-existent car \u2014 unless you have car gap insurance.<\/span>\u00a0<\/span><\/p>\n

Understanding How Car Gap Insurance Works When Your Car Is Totaled<\/span><\/b>\u00a0<\/span><\/h2>\n

You might have heard the old joke about your car losing thousands of dollars as it leaves the car lot. It\u2019s actually more a sad reality than a joke. On average, a new car loses around 20 percent of its value in the first year. That value in reverse is called depreciation.<\/span>\u00a0<\/span><\/p>\n

For example, you pay $30,000 for a new car. Due to depreciation, its value almost immediately drops to around $24,000. You\u2019ve lost $6,000 in what the car is considered to be worth on the open market.<\/span>\u00a0<\/span><\/p>\n

Now imagine you\u2019re involved in an accident that damages your new car beyond repair. Your auto insurer feels it\u2019s financially smarter to junk the car and give your lender the cash value of what it was worth at the time of the accident.<\/span>\u00a0<\/span><\/p>\n

Your insurer consults Kelley Blue Book or a similar resource to see that the ACV for your vehicle is $24,000. However, you still owe the bank or finance company around $27,000.<\/span>\u00a0<\/span><\/p>\n

Your insurer will send your lender the $24,000, and your lender will tell you to keep paying off the additional $3,000 you still owe.<\/span>\u00a0<\/span><\/p>\n

However, if you have added car gap insurance to your auto coverage policy, your insurer will pay that final chunk of cash so you won\u2019t have to keep paying for a car you no longer own.<\/span>\u00a0<\/span><\/p>\n

Car gap coverage is usually only an issue for the first three years of a new car loan. If you\u2019ve been steadily paying off the vehicle to your finance company, the value of your car will eventually catch up with what you owe and you can discontinue your gap coverage.<\/span>\u00a0<\/span><\/p>\n

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Georgia-Specific Regulations and Requirements for Car Gap Insurance<\/span><\/b>\u00a0<\/span><\/h2>\n

If you\u2019ve ever had car gap insurance in another state, you\u2019ll be glad to know that the coverage works pretty much the same way in Georgia. If your insurer doesn\u2019t offer gap coverage, it may be time to think about <\/span>switching to a new insurance company<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

The only situation where you can\u2019t purchase a gap policy when buying a new car in Georgia is if the purchase price of your new car includes the negative equity of a car you\u2019re trading in as part of the transaction. Negative equity occurs when you\u2019re trading in a vehicle that is worth as much money as you still owe on it.<\/span>\u00a0<\/span><\/p>\n

Used Cars and Gap Insurance: Can You Get Coverage on a Pre-Owned Vehicle?<\/span><\/b>\u00a0<\/span><\/h2>\n

Sometimes you can purchase gap insurance on a used car \u2014 but that only applies in a few situations.<\/span>\u00a0<\/span><\/p>\n

Generally, depreciation happens to new cars. If your car is used, in most cases it\u2019s already lost its new-car sticker-price value. One exception might be if you\u2019re buying a car that\u2019s only one model year old. In that case, it might still have value to lose.<\/span>\u00a0<\/span><\/p>\n

If you are buying a late model pre-owned vehicle, ask your auto insurance agent to crunch the numbers and help you decide if adding gap coverage to your auto policy is right for your wallet.<\/span>\u00a0<\/span><\/p>\n

Frequently Asked Questions<\/span><\/b>\u00a0<\/span><\/h2>\n

Here are answers to some of the most basic questions on car gap insurance.<\/span>\u00a0<\/span><\/p>\n

What is Gap Insurance for Cars?<\/span><\/b>\u00a0<\/span><\/h3>\n

It\u2019s additional coverage you can add to your auto policy when you buy a new car. New cars quickly lose their new-car value. This is called depreciation, and it means that your car might lose thousands of dollars in value as it comes off the car lot.<\/span>\u00a0<\/span><\/p>\n

If you total your new car, gap insurance will ensure you don\u2019t owe money on it. Your insurer will pay the difference between the value of the car and the amount you still owe on your loan.<\/span>\u00a0<\/span><\/p>\n

How Does Gap Insurance Work if Your Car is Totaled?<\/span><\/b>\u00a0<\/span><\/h3>\n

If your car is lost or totaled for any reason, including <\/span>most types of damage covered under your policy<\/span><\/a>, theft, fire, or flood damage, your insurer will pay for the vehicle\u2019s actual cost value (ACV) instead of trying to repair it.<\/span>\u00a0<\/span><\/p>\n

If the ACV is less than what you still owe on the loan, your insurer will pay the difference. That way, you won\u2019t owe anything on a car you no longer have.<\/span>\u00a0<\/span><\/p>\n

How Much Does Gap Insurance Cost?<\/span><\/b>\u00a0<\/span><\/h3>\n

The cost will vary depending on the make and model of your vehicle and how much you paid for it. In Georgia, the cost can be as little as a few dollars a month.<\/span>\u00a0<\/span><\/p>\n

It is almost always cheaper to buy this coverage through your auto insurance agent than from the car dealership. Ask your agent to run the numbers.<\/span>\u00a0<\/span><\/p>\n

How is Your Car\u2019s Actual Cash Value (ACV) Determined?<\/span><\/b>\u00a0<\/span><\/h3>\n

If your car is totaled or permanently lost for any reason, your insurance agent will consult sources such as Kelley\u2019s Blue Book to determine what the average car of your make, model, and year should be worth. That\u2019s known as the actual cash value, and it\u2019s what your insurer will pay \u2014 regardless of how much you still owe on the car.<\/span>\u00a0<\/span><\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n<\/div>\n\n\n

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Getting Gap Coverage in Georgia\u00a0<\/h2>\n\n
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You\u2019ve got enough to worry about if your practically new car is ever totaled or lost to theft. The last thing you want to stress out about is the need to keep paying your finance company for a vehicle you no longer have.<\/span>\u00a0<\/span><\/p>\n

The solution is highly affordable car gap insurance you can purchase from your independent auto agent at Southern Harvest Insurance. Simply call us at <\/span>877- 831-4677<\/span><\/a>. You can also get a <\/span>quick quote online<\/span><\/a> or <\/span>find a Southern Harvest Insurance office near you<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n <\/div>\n