Gap stands for “guaranteed asset protection”. This is an optional type of auto insurance in Georgia generally discussed in connection with newer cars. Gap coverage in Georgia is designed to financially protect a driver’s loan obligations after an accident or other hazard results in a total loss and the insurance payment is less than a loan in course on the vehicle.
What is gap insurance?
If you severely damage or total your car in an accident, if it is destroyed by fire, flood or other hazard, or if it is stolen, the gap insurance will cover any difference between the amount you are paid by your auto insurance company for replacement costs and the total amount you owe on a loan for the vehicle. This financial gap exists because a typical auto insurance policy pays for the car’s current open market value or “depreciated value,” which may exceed the outstanding loan amount. This is especially relevant if you are buying a brand new vehicle, the value of which will depreciate significantly once it leaves the lot.
How Does Gap Insurance Work in Georgia?
Gap insurance does not provide full compensation in all situations. In Georgia, it is important to know precisely how and in what situations the gap coverage comes into play.
Gap insurance does not apply to all vehicles; it generally covers new vehicles and those with up to a model year. Often times the spread coverage will be purchased in conjunction with the actual auto loan. Gap does not cover, for example, situations in which you owe more on a loan because you have traded in a vehicle for which you still owe money.
Gaps coverage is really a very narrow form of auto insurance coverage. It has nothing to do with the guarantee of a new car replacement coverage. This will not help with rental or towing, and is not an extended warranty. Gap does not cover anything except the difference between the loan amount and the value of the car at the time of the claim.
When do you use gap insurance?
Gap insurance only intervenes in the event of total loss of your vehicle. This usually happens as a result of an accident when your insurer considers your car to be total, although other events can trigger gap coverage.
For example, if your car is stolen and not recovered, or destroyed in a tornado or other natural disaster, you will recover the market value of the car as you would a vehicle totaled in an accident. If this amount is less than an outstanding loan, gap coverage can make up the difference.
Gap insurance vs other coverages
Because variance insurance is a form of limited coverage for a specific situation, it should not be confused with liability coverage or the two other important forms of coverage: collision and property and casualty, both of which protect you financially when your car is out. is damaged in the course of repairs.
|What it covers||The difference between full loss recovery and the outstanding vehicle loan.||The cost of repairs caused by events other than an accident such as natural disasters, fires, theft and vandalism.||The cost of repairs caused by a single vehicle accident or collision with another vehicle.|
|Who offers it||In Georgia, you can purchase gap coverage from the car dealership that sold the car, your lender, or your auto insurer (if applicable).||Comprehensive coverage is standard on most auto insurance policies.||Collision coverage is standard on most auto insurance policies.|
Where to buy gap insurance in Georgia?
You can usually purchase gap insurance from most of the best Georgia insurance companies. Since car buyers frequently finance their purchases, gap insurance is usually offered as a standard option by these companies.
Since dealers and finance companies have a monetary interest in the vehicle, lenders and dealers will often sell gap insurance as well. The gap insurance is specifically excluded by status of Georgia Government Insurance Regulation. As a result, there are few restrictions on these sales.
Gap Insurance Companies in Georgia
Not all auto insurance companies in Georgia offer gap insurance coverage. Geico, for example, does not offer spread coverage to its policyholders. However, most of the largest auto insurers (by market share) offer gap coverage in Georgia, as do dealers and finance companies. Here are some specific examples:
- AAA: The carrier provides coverage for gaps provided the insured vehicle has full coverage and collision coverage. In addition, if the insured vehicle is considered a total loss, AAA waives up to $ 1,000 of the policy deductible.
- Progressive: Progressive also provides gap insurance for those who also have full and collision coverage. Progressive offers “loan / lease repayment coverage” for an average cost of $ 5 per month.
- State Farm: While State Farm does not offer gap coverage as such, the carrier does offer “Protector of earnings”Option that offers spread protection to people with a car loan from a State Farm bank. A buyer is eligible even if the required full coverage is provided by another carrier.
Many dealerships offer Gap coverage in Georgia, such as:
- Cobb County Toyota: Spread coverage can be included as part of a car loan. This increases the monthly loan payment by a modest amount.
- IQ Cars: IQ has a presence in Georgia as well as other locations nationwide. It’s a large dealership that offers a variety of spread options as part of its selling process.
Frequently Asked Questions
How much does gap insurance cost?
Gap insurance is usually available from your auto insurance company, auto lender, or the dealership where the car was purchased. Typically, you will pay more from your lender or dealer than if you bought it through the dealer. Check with your auto insurance company first, who can provide gap coverage for a nominal annual amount.
Is gap insurance compulsory in Georgia?
Gap insurance is not included in Georgia insurance laws and regulations and is not legally required. Despite this, it is generally recommended to look for this option when acquiring coverage for a new car, especially when the make and model of the vehicle has a reputation for depreciating quickly.
Can I cancel my gap insurance coverage?
Yes, you can usually cancel the gap insurance if you feel it is no longer necessary. This can happen when you are certain that your loan has been reduced enough that the outstanding balance is less than the vehicle’s actual cash value. Be sure to check with your gap insurance provider to verify all cancellation requirements.