What Does Gap Insurance Cover?

car accident

If your recently-purchased car is totaled, standard insurance covers you up to your car’s current market value. However, new cars depreciate the fastest during the first few years — leaving a gap between your car’s market value and what you actually paid. GAP insurance exists to cover that depreciated value. When it comes to accidents, environmental damage, and more — what does GAP insurance cover? Read below to learn how GAP insurance differs from collision, liability, and comprehensive auto insurance. Contact the Honda Universe finance team to learn more about auto coverage for Freehold-rea drivers.

What Does GAP Insurance Do?

Like extended warranties, GAP insurance builds on your existing coverage. In terms of damages, what does GAP insurance cover? GAP insurance kicks in to cover the difference between your Honda vehicle’s current value and the amount you owe on it. Damages from the following are covered:

  • Fire
  • Theft
  • Vandalism
  • Storm Damage
  • Other Natural Disasters

Is GAP Insurance Necessary?

Once you’ve been driving your car for several years, depreciation rates slow significantly. GAP insurance is a smart choice if you purchased your car recently, because the difference between your car’s market value and what you recently paid for it can total thousands of dollars. Purchasing GAP insurance now means you won’t have to finish paying off a totaled car.

When to Get GAP Insurance

GAP insurance isn’t necessarily the right choice for all Toms River car-owners. What does GAP insurance do and who will benefit from it most? Consider adding GAP insurance to your standard coverage if any the following apply to you:

  • You paid less than 20% as a down payment.
  • Your financing term is 60 months or longer.
  • Your vehicle is expected to depreciate faster than average.
  • You hold negative equity from an old car loan.

Explore Your Auto Coverage Options with Honda Universe

If you’re ready to discuss your auto courage options in Jackson, contact us to speak with a financing expert to see if gap insurance is worth the extra monthly payment. We’re happy to answer any questions about your auto insurance or Honda warranty, or help you learn how to lease a car with poor credit!

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