gap insurance on a car how does it work?

[mrpike1973]

hi all well today my nice 04 grand am caught on fire someone came to our door and said are car was on fire its totaled. plain and simple i owe more on the car than its worth i have full coverage and gap insurance. does anyone know how this works. the book is about 6000 which my car insurance should come close to i hope. then i owe total about 10,000. now gap says it pays up to 100,000 or 150% above nada or book price everyone says i shouldnt worry but i think i'm gonna owe big time anyone know how this works

[Dave S]

Your GAP insurance should cover the negative equity.. It's a very wise choice if you suspect you might be under water faster than you pay it off.

Case in point:

I had a '04 Dodge Hemi Sport pickup. The first mistake was going into the truck upside down to begin with and paid full msrp ($40K). I had 5000 miles on the truck when I was involved in an accident that ripped the drivers side off the truck, twisted the frame as well as a bunch of other issues.

I had AAA as my main insurance who paid what the truck was worth at the time to the tune of about $28K. The GAP insurance covered the remaining $12K, no questions asked. They just said they were glad to hear I walked away from the accident.

[fishtrap3]

Never heard of GAP insurance... Where does one get this from and how much does it cost??

[HNTNBUX]

GAP insurance is offered by the dealer or I got mine through the credit union I finance with at a better price. Same with purchasing an extended warranty, I went through the credit union. Hopefully I will not need it but the peace of mind is worth it. I think I paid roughly $300 for a new Grand Prix, the dealership wanted $600.

[New Yankee]

Pike - if your coverage states up to 150% of NADA Retail, and that number (with all the adds and subtracts) is 6K, then your insurance will pay up to 9K less your comprehensive deductible.

The coverage is usually available through dealers or your financial institution, or your insurance company. As noted prior, good to have if you buy a new vehicle with no money down, or go into the deal with negative equity (upside down) to begin with. Many will have time limitations such as the first two years of the loan or ownership, also with different maximums - 125%, etc. Of course, it doesn't make sense if you have considerable equity to start with as you'll never access the coverage.

[ozzie]

I found out earlier this year that GAP coverage doesn't always cover the total difference between what the vehicle is worth to what is owed. they can and will deduct from the GAP payout for things such as was the car in perfect condition or how used were the tires.....

[Hillbiehle]

DO NOT BUY GAP COVERAGE FROM YOUR DEALER! When you call your insurance agent to add the vehicle, ask them to add the Gap Coverage. Price will range from $30 to $50. Much cheaper than purchasing from any dealer. With the money you save by not buying from the dealer, you should also be able to have your agent add new car replacement as well (if you wreck your 2010 truck next year, they will replace it with an 2011).