What is the GAP Insurance?
Most of the insurance companies only reimburse the owner, the market value of the car in the event of a vehicle theft or an accident that results in total loss of the car. However, you may owe a loan balance for the car which is much higher than the market value of the car. This, shortfall along with the deductibles, can create a significant gap between what your insurer will pay you and the outstanding balance on your loan.
The Guaranteed Asset Protection (GAP) Insurance promises an extra layer of insurance coverage over the regular insurance policies. In the case of vehicle suffering a total loss or in the event of a write off, standard car insurance policies only provide the replacement cost of the vehicle on the book value. Hence, GAP Insurance provides you the difference between the what you owe and what is the market value of the car, thus helping you to buy a new car without suffering a huge loss.
Why there is a Gap?
In a situation when your car is worth less than what you owe which is often called negative equity, puts the car buyers at risk, since the auto insurance companies would not pay more than the market value of the car. Below is the example shown to illustrate how BMW GAP eliminates the gap:
Loan balance ������������������������������������������������� $29,000
Insurance settlement������������������������� �������� � $25,500
Gap ���������������������������������������������������������������� �$3,500
Insurance deductible������������������������������������� + $500
Potential expense ����������������������������������������� �$4,000
Out-of-pocket expense with BMW GAP ����� ���������$0
Why GAP Insurance for BMW?
The chances of your vehicle being involved in total loss are greater than you think because there is a common risk of collision, theft and natural disaster. If you buy a BMW GAP Insurance policy, you can be confident that your deductibles will be paid off. Also, Safe-Guard Products administered BMW which, according to the statistics, is currently providing protection products to more than 2 million vehicles in the United States. Buying GAP Insurance will give you much needed peace and eliminates financial strain in case of total loss of BMW.
How to get GAP Insurance coverage?
GAP Insurance coverage is offered by both the car financing companies and car insurance companies. It is even offered by the car dealers. Car dealers charge a hefty sum as a premium for GAP Insurance, thus it is best to go to finance companies or insurance companies for GAP coverage. The car insurance company simply requests you to add the policy coverage to your existing policy which usually results in a slight increase in premiums. Moreover, you can opt for car financing companies for GAP coverage who will add a GAP waiver for a small additional cost.
Conclusions
To conclude GAP insurance covers the difference between the value of the car and the amount you paid in the first place. Since, BMW is an expensive car and the total loss will be great in case of a car being stolen and written off, therefore it is advisable to buy GAP Insurance coverage for your car and save your out of pocket expense.
