When you buy insurance for your car, most insurance companies will only insure the car for Actual Cash Value. Actual Cash Value is decided by subtracting depreciation from what the car cost when new. In many instances, a person may owe more money on their car than what the Actual Cash Value is, especially considering cars decline in value so quickly. As a result, if the car owner completely wrecks their car, they end up owing the bank money on a car they can no longer drive.
GAP Insurance was designed to cover the balance due to the bank after the car insurance policy pays. In many instances, the car dealer will try to sell you GAP insurance and include it on your car note. This is convenient, but you will find it can be quite expensive, plus you end up paying interest on the GAP insurance. It is suggested that you call your insurance agent as in most cases, your insurance agent can offer GAP coverage for a much cheaper price and you won’t have to pay interest on the premiums.
Learn more about how this could affect your Colorado Auto Insurance with The Insurance Advisors today!