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What Is GAP Insurance and Why Do You Need It?

What Is GAP Insurance and Why Do You Need It?

Whether you're an experienced driver who's just purchased a new vehicle, or you're a new driver ready to take over the old family car, you're going to need auto insurance. At the least, you'll be required by law to carry minimum liability car insurance. This is the least amount of coverage you can carry to drive legally. Minimum liability may differ depending on your state. In the state of Florida, for example, you'll need at least $10,000 in coverage for both personal injury and property damage. You'll then need to work with your insurance company to decide if you need any additional levels of coverage, such as collision insurance or comprehensive coverage. Considering how common car accidents are in the United States (Florida saw over 2,900 fatal crashes in 2019), it's probably a good idea to have additional coverage. 

GAP Insurance

If you're financing a new or used vehicle through a car loan, you'll likely want to look into GAP insurance as well. Guaranteed Asset Protection (GAP coverage) will cover the outstanding balance that may remain if you total your financed car but still owe more money on it than the actual cash value of the vehicle. You can purchase GAP insurance

from the car dealership or from an auto insurance company. Depending on your state, you may be able to find better deals on GAP coverage, and different factors may affect how much insurance companies will usually pay. Here's everything you need to know about GAP insurance Florida, for example.

How does GAP insurance work?

No matter what state you're in, GAP insurance coverage will cover the gaps between your car's actual cash value and the amount you still owe your lender on an auto loan if you total your car. In
order for a vehicle to be considered a total loss, the needed repairs have to cost more than the car's actual cash value. Most auto insurance policies will only cover the car up to its cash value, which is
determined largely by depreciation. Most people have heard that your car depreciates the second you drive it off the lot, and in just the first month, your car will lose ten percent of its overall value. Within five years, it will only be worth 35% of the original value.

As for who needs GAP insurance, it's a good idea for anyone who's recently taken an auto loan out on a new car and doesn't expect to have the loan repaid any time soon to consider looking for a
GAP insurer. The last thing you want is to have to pay back a loan out of pocket for a car that you don't even have anymore.

Who offers GAP insurance in Florida?

While you can buy most forms of a car insurance policy from any auto insurer, not all of them will offer GAP coverage in your state. If you want Florida GAP insurance, you'll need to purchase it
from one of the following companies:

  1.         Allstate
  2.         Farmers
  3.         Infinity
  4.         LibertyMutual
  5.         Progressive
  6.      Select
  7.         State
  8. Farm Mutual Auto
  9.         USA

While they are popular providers for most car insurance policies, you won't be able to get GAP insurance from GEICO or Allied P&C. Some auto insurance providers may also have their own
specific requirements for drivers who want GAP insurance.

Which companies have the best rates?

Fortunately, many insurance providers offer GAP insurance for low monthly payments. In fact, it's possible to get an annual policy for as little as $60 per year. USAA, Allstate, and Esurance all have especially good customer satisfaction ratings as well as financial ratings. One last thing to keep in mind while you're shopping for providers is that some companies may require you to have collision or comprehensive coverage before they'll sell you GAP insurance.