What is Gap Insurance?
If a car is stolen or declared totaled, the auto insurance company will pay actual cash value for the car.
The actual cash value can be a lot different from what is owed on the vehicle.
Without gap insurance the lender will hold the individual responsible for paying the difference between the actual cash value and the amount left on the loan. Gap Insurance covers this amount.
Once a relatively expensive purchase, many Massachusetts auto insurance companies now offer Gap coverage as part of their insurance programs they offer to preferred drivers.
For instance, Vermont Mutual offers their “Advantage” endorsement for step 99 & 98 drivers. For $49 this endorsement includes, among many things, “Auto Loan/ Lease Gap Coverage.”
This endorsement reads:
This coverage applies to Optional Insurance:
a. Collision (Part 7)
b. Limited Collision (Part 8); and
c. Comprehensive (Part 9).
In the event of a covered total loss to your auto shown in the Coverage Selections Page, we will pay any unpaid amount due on the lease or loan less:
a. The amount paid under Collision (Part 7); Limited Collision (Part 8); or, Comprehensive (Part 9) of your policy.
b. Any:
- Overdue lease/loan payments.
- Penalties.
- Taxes.
- Interest or charges resulting from overdue payments at the time of the loss.
- Financial penalties imposed under a lease for excessive use, abnormal wear and tear or high mileage.
- Security deposits not refunded by the lessor
- Costs for extended warranties purchased with the loan or lease.
- Cost for Credit Life insurance purchase with the loan or lease.
- Cost of Health, Accident or Disability insurance purchased with the loan or lease.
- Carry-over balances from previous loand
- Carry-over balances from previous leases.
Call or click us today to get your free, full, comprehensive Massachusetts auto insurance review!