Should I Get Gap Insurance?

January 19th, 2019 by

Gap Insurance Form

There are a wide array of insurance options out there. Some are very necessary, while some aren’t as essential. One insurance option is gap insurance. But what is gap insurance and should it be something you add to your policy? Today in the Thompson Sales blog, we’ll explain.

What is Gap Insurance?

Simply put, gap insurance is meant to cover whatever is owed on your car loan that is over what your insurance company pays out. So, to put it in numbers, imagine that you bought a car for $20,000. You put $1000 down on that vehicle and drove it off the lot. Your vehicle has started to depreciate at that moment. If you total your vehicle and your insurance will only pay out $15,000, it’s because that’s what it calculated your car to be worth. This means you’ll still have thousands of dollars left to pay off, even though you don’t have a car anymore.

Gap insurance would cover that leftover money so you wouldn’t owe anything.

Should I Get Gap Insurance?

Whether or not you should get gap insurance depends on your situation. If you plan on having your car paid off in a year or two, there isn’t as much of a need. By the same token, if you put down a significant down payment you also may have less of a need for gap insurance.

You should also consider the kind of car you buy because some cars depreciate much faster than others. If you have a car with a high rate of depreciation, you’ll definitely want to consider gap insurance.

Gap insurance is certainly a big safety net, so it’s definitely worth considering. The biggest downside, of course, is that your monthly insurance rate will be higher, but you’ll be glad you have it if you do get into an accident. In the end, the decision is yours, but you should look at all the factors in play before making your final decision. 

Choose Thompson Sales for Your New or Used Vehicle

Are you looking to buy a new or used vehicle? Thompson Sales is here to help. We have a wide selection, and our sales staff can help you pick the perfect option for you. We also have an auto shop if you’re ever in need of maintenance or repairs. Contact us today for more information or come on by the Thompson Sales lot to browse our selection.