It’s always important to protect your belongings, and this is why insurance was created. You probably know how essential liability and collision policies are for your car, as they will help pay for repairs or medical bills in the event of an accident. However, there’s another type of insurance meant to safeguard your finances: BMW gap insurance.
What Is Gap Insurance?
Gap – Guaranteed Asset Protection – insurance is important when financing a vehicle. This is because if it is totaled in an accident or stolen, you will be covered. If you have a collision policy, it will only give you money for the actual value of the vehicle. And, because of depreciation, your car may actually be worth less than what you owe.
How Gap Insurance Works
Gap insurance is pretty straightforward. Let’s say you buy a BMW SUV for $30,000. After paying off $10,000 of the loan, it gets stolen. Because of depreciation, the car is only deemed to be worth $18,000. Your insurance company will give you that $18,000, but you’ll be on the hook for the remaining $2,000. With gap insurance, you won’t need to take anything out of your own pocket.
Is Gap Insurance Always Necessary?
If you lease a car, gap insurance will probably be included in the costs. However, the option will be up to you when financing. If you’re not spending a lot of money on a vehicle, gap insurance may not be worth the expense. But for new cars and those that have high depreciation rates, it is probably a wise idea.
If you’d like more information about gap insurance or other protection options, feel free to get in touch with BMW of Catonsville.
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Finance