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Gap Insurance Companies in New Jersey - Plymouth Rock

If you are looking for gap insurance, you will be able to purchase coverage through most auto insurance companies. Gap insurance can be added to your car insurance policy, along with the other coverage selections you make. But how can you tell if you need it? 

You’ve made your way to this article, so you probably have a sense that you may need gap insurance, but there are plenty of New Jersey drivers who may be completely unaware of the financial risk they take every day that they get behind the wheel of their car. This risk has little to do with bodily harm or physical damage, but more to do with financial risk. 

Even if you think you are completely protected with “full coverage” by carrying comprehensive and collision protection, you could potentially be overlooking a substantial gap when it comes to protecting your finances. Even though there’s no such thing as a “gap insurance company” that solely exists to provide gap protection, let’s consider some important questions about this coverage and how it may relate to your situation.

What is gap insurance, and what does it cover?

Imagine for a minute you’re involved in an accident that totals your car. Other than being a little shaken up physically, you’re alright. That is, until you receive a check from your insurance carrier that is thousands less than what you still owe on the loan you took out to purchase your car. How could this happen? A standard policy will generally indemnify you when you have suffered loss or damage; to “indemnify” you means that the insurance company will provide coverage to bring you back to where you were before the loss, i.e., making you “whole” again. Your car will have depreciated in value since you first purchased it, making the current value of your car (before the loss) the amount the insurance company will consider, not the amount you originally paid and not the amount of the outstanding loan. Gap insurance covers the dollar gap that may exist between how much your car is worth at the time of a claim (fair market value) and the amount of the loan you still owe on the vehicle when you financed the purchase.

Think of it this way. If a customer loses their small, modest home in a hurricane, it would be unrealistic to assume the insurance carrier will provide them the funds to build a state of the art version in its place, when what was lost was modest and not updated. Although this is an extreme example, your car is not much different. According to the Insurance Information Institute, most cars lose up to twenty percent of their value in a year. If you have a loan amount that exceeds the fair market value of your ride, it’s a good idea to consider gap insurance.

What does your current car insurance policy cover?

Generally speaking, if you drive a late model vehicle you probably have comprehensive and collision coverage. Most financial institutions that provide car loans will require full auto coverage in order to protect their interest as a lender. However, it’s wise to review your insurance policy just to be sure. If you have a loan that exceeds the current value of a car that is deemed a total loss following an accident, and you don’t have collision coverage – you’re on your own to pay the full amount of the loan. Even if you have both comp and collision on your policy, if your car is stolen, or involved in an accident resulting in a total loss, whether or not it’s your fault, you may be left holding the proverbial “bag” without having gap insurance on your policy as well. Though, if you have the money in reserve to cover this eventuality, then you might choose in favor of foregoing gap insurance.

Where should you purchase gap insurance?

When you’re completing the paperwork with the finance and insurance person at the dealership, they may discuss gap insurance with you, and ask you to buy it from them. It’s important to remember that you may be required to purchase gap protection; however it’s your choice who you buy it from. If you’re financing the purchase of your car, the lender will generally require comp and collision and sometimes gap insurance. If you’re leasing a vehicle from the dealership, they may require you to cover the vehicle with gap insurance. Both the lender and the dealership want to protect their interests, so it’s not unreasonable for either to make certain requirements. You can purchase gap protection through the dealership, but they will almost always charge you more for the same coverage that you can buy from your insurance carrier. There’s nothing wrong with them offering you insurance protection, but it’s probably not their area of expertise. Dealerships provide cars. Insurance carriers provide insurance. Purchasing gap insurance from an insurance carrier as opposed to a car dealership presents a situation when you can simultaneously choose the expert and save money.

How much will gap insurance cost you?

Remember, the gap between what your car is worth and how much you still owe on the loan could be thousands of dollars. So, what will gap insurance cost? Wait for it… how about around twenty dollars per year on average! That’s a no-brainer if you’re even a little upside down on the finance of your vehicle purchase.

Is gap insurance right for me?

It’s highly recommended that you purchase gap insurance if you drive a late model vehicle that has a loan amount that exceeds the current market value of the vehicle. Cars that have an initial price tag that’s higher than your average four-door sedan generally depreciate faster over time and have a higher rate of theft. If you have additional questions about gap insurance and whether it’s right for you, contact Plymouth Rock Assurance today to speak with a friendly, knowledgeable representative who would be happy to assist you!

You can also read more information about the best car insurance and additional savings tips to help make sure you are getting the best coverage for the best price!

Call 855-993-4470, get your free quote online or find a local agent to see how our company can help you with gap insurance in NJ. If you need additional information, please visit our Contact Us page.