What is Gap Insurance?

Woman upset over accident

Most often, when you purchase a new car, you’ll take out an auto loan to do so. That’s why, when discussing insurance options for your new vehicle, you may want to consider gap insurance. This type of insurance helps protect you if you have an outstanding auto loan and your vehicle is damaged. Below, Silko Honda has covered this topic in-depth to give you a better understanding of the type of coverage this insurance provides.

What Does Gap Insurance Do?

Gap insurance is a type of auto insurance designed to cover the gap between the owed amount on the car and the true cash value of the car at the time of an accident. So if your car is stolen, or totaled from an accident, gap insurance will fill the void between what traditional insurance will payout, and the remaining balance of your loan. This leaves you with a clean slate instead of you being stuck making payments on a vehicle you can no longer drive.

What Does Gap Insurance Cover?

Gap insurance is meant to cover damage to your vehicle, not bodily injuries or property damage. See what exactly is and isn’t covered by gap insurance:

Gap Insurance Covers:

  • Theft
  • Vandalism
  • Accident
  • Fire
  • Acts of nature (tornado, hurricane, flood, etc.)

Gap Insurance Does NOT Cover:

  • Deductible (though some gap insurance policies allow this)
  • Engine failures and other mechanical repairs/malfunctions
  • Extended warranties
  • Death

Do I Need Gap Insurance?

No, it’s not mandatory like liability insurance. However, it’s highly recommended that you opt for gap insurance when purchasing a new car. Pay a visit to Silko Honda and we can discuss this further when going through the various insurance plans and financing options available to you.

Explore All Insurance and Finance Options at Silko Honda

Wherever you’re in the car-buying process, being informed about insurance options, vehicle protection plans, and vehicle service contracts can save you money and frustration down the road. At Silko Honda, we want to make sure you fully understand what you want and need before purchasing a car. To speak with one of our representatives, visit us today in Raynham or simply contact us online with any questions you may have!

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