What Is Gap Insurance?

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If you’ve just driven your car off the lot at FIAT of Glendale, the last thing you want is to ruin your brand new car by totaling it, then get way less than what you paid for your insurance. Why does this happen? The reason that happens is once you drive off the lot in Los Angeles, your car will depreciate – that’s the value you’ll be compensated for. What is gap insurance, then? That’s a type of insurance you can buy that will get you extra protection for the gap between depreciation and your car’s purchase price.

What Is Gap Protection?

You might be asking “what is gap insurance and what does it cover?” Gap insurance is much like an extended warranty or a specialized coverage like windshield replacement insurance except in this case, gap insurance augments your existing coverage. That means it’s not a replacement for your normal coverage, but rather insurance on the difference between your car’s present value and how much you owe on it, just in case the unthinkable happens in Pasadena and your car is totaled.

These happenings are covered by gap insurance in case you need to file a claim:

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

When Should I Get Gap Insurance?

Gap insurance is a great idea in certain circumstances, but it’s not for everyone who drives in Pasadena. This is another part of the answer of “what is gap insurance on a vehicle?” and it’s important to consider gap insurance if any of these apply to you:

  • If you’ve got a financing term of 60 months or longer.
  • If your vehicle is expected to lose value faster than average.
  • If you paid less than 20% as a down payment.
  • If you hold negative equity from an old car loan.

In addition, if you’ve driven your car for a few years, depreciation will slow and gap insurance will be less attractive an option. However, if your car is less than a year old, gap insurance is probably your best bet because of the way cars depreciate.

FIAT of Glendale: The Finance Experts

Now that we’ve answered “what is gap insurance?” for you, you should definitely check out some other great offerings from FIAT of Glendale, such as our great lineup of used cars and our excellent service. If you’re ready to take the next step and get into a great Fiat, just contact us.

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