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Gap Insurance in Pennsylvania - Plymouth Rock Assurance

Imagine this situation. You purchase a brand new car. As you leave the dealership, you have an accident. The vehicle suffers significant damage. And, then, the insurance company declares it a total loss. But, what you might not realize is that your new car may no longer be worth enough to cover the loan you have on it.

How can that be?

The value of a vehicle depreciates immediately after purchase. It is no longer possible to call this a new car – someone has owned it. As a result, even if it still has very low miles, the value of the vehicle may be less than what is owed on it. But, you can avoid this type of high-risk situation by purchasing gap insurance. Gap insurance in Pennsylvania can help you to minimize the financial loss you could suffer when you owe more on the car than it is worth.

What Is Gap Insurance Coverage?

Having a comprehensive auto insurance policy is essential to protecting the value of your car and keeping you from suffering significant financial loss. However, according to the Insurance Information Institute, the average car loses about 20 percent of its value within the first year. This could create a significant issue, where you do not have enough coverage to repay the debt you have on your car.

Standard auto insurance policies will cover the value of the car at the time of the incident. This is a depreciated value, often significantly less than what your auto loan balance is on the vehicle. But, gap insurance can help fill in this space, with coverage for the difference between what you owe and what your standard auto insurance covers.

Why Do You Need It?

There are some situations where gap insurance is essential. Here are a few examples:

•    You make a low down payment on your vehicle at the time of purchase. Specifically, if this is under 20 percent of the value of your car, consider  gap insurance.
•    You applied negative equity from another vehicle loan to your new car when you purchased it.
•    You financed your car long term, generally longer than 60 months, which increases the risk of having a loan amount higher than the value of the car.
•    You have a leased vehicle. Most leasing companies require individuals to carry gap insurance for any leased vehicle.
•    You financed a vehicle likely to depreciate quickly, such as an older vehicle.

In these situations, working with a company that offers quotes on gap insurance can help to reduce some of the costs you face. In most cases, it is an inexpensive addition to what you are already paying. However, if you need to use this insurance, you will appreciate the coverage provided.

Do All Insurance Companies in PA Provide Gap Insurance?

Not all auto insurance companies provide this coverage. Look for auto insurance companies with flexible policies to fit your needs. Generally, you can obtain the policy from your existing insurance provider as an additional layer of coverage. However, if your insurer does not offer it, you can purchase coverage from a separate insurer.

Driving without this type of auto insurance is risky. It can put you in a position where you do not get the financial support you need in the case of a total loss to your vehicle due to an accident, theft, or another incident. Remember, what your auto insurance company will pay depends on the value of your car at that point in time. Consider purchasing this coverage for your financed vehicle to keep yourself financially protected.

You may also be interested to know more about your car and hurricane damage, or what happens if your car is in a flood, as well as understanding new car insurance.

Call 855-993-4470, get your free quote online, or find an agent to learn more about insurance companies that offer gap insurance in Pennsylvania. Visit our contact us page if you need to call us with additional questions.