Do You Need Gap Coverage on Your Autos?
Do you need gap coverage on your autos? If you own a business and have auto loans or lease your vehicles, you may want to think about auto loan/lease gap coverage on your autos.
If one of the vehicles is totaled in an accident, you might think that you would no longer have to pay off the balance of any loan or lease attached to that car.
However, that is not the case, and it could present your business with a real financial strain. Unless you have gap coverage on your autos
Your insurance carrier will give you the depreciated value to replace the totaled vehicle. However, that depreciated amount may not be enough to cover the remaining outstanding amount of the loan or lease.
If, for example, a $25,000 car is totaled in the first year of ownership and the loan has not been paid off, you could be in trouble, because the insurance company would give you only the depreciated value of the car. If that figure were $20,000, you’d be responsible for the remaining $5,000 on the loan or lease. Therein lies the problem.
If you are a business owner with many vehicles, you can multiply this scenario to see how it could add up quickly.
Take a few minutes to take an inventory of the vehicles used in your business. If a vehicle is newer, there may be a larger loan or lease than on an older vehicle. Gap coverage could come in handy here. You may not want to replace older vehicles if they are totaled. In that case, gap coverage wouldn’t be needed.
Most insurance carriers offer gap coverage for a very reasonable premium. It could save you a lot of headaches.