Do you need gap insurance for your car in Washington State? Learn what this insurance is and how it can help you if your vehicle is totaled in a car accident.

Should I purchase gap insurance for my automobile?

 

A:

Whenever you purchase a new or used motor vehicle, it begins depreciating quickly—as soon as you drive it off the lot. Especially if your vehicle is new and its purchase is financed, this can cause you significant financial hardship if your vehicle is totaled in an automobile accident. However, you can protect yourself by having gap insurance.

What Is Gap Insurance?

Gap insurance is optional insurance coverage you can buy for a vehicle that you purchase or lease. Insurance companies in Washington State who offer collision and comprehensive automobile insurance coverage are required to provide you with this coverage if you request it.

This insurance covers the difference between what you owe on your automobile loan or lease and your vehicle’s actual cash value. The actual cash value is the amount it would cost you to replace your auto after a collision with a comparable one, less depreciation. If your car is totaled, you are only entitled to be paid the vehicle’s actual cash value under your collision coverage—another optional coverage you can purchase—or from the negligent driver who caused your crash. The difference between what you can receive under your coverage or a settlement and the amount you owe on your auto loan can be thousands of dollars.

Gap insurance protects you by paying off the balance owed on your vehicle loan after you receive its actual cash value in settlement of your insurance claim. For example, you may be entitled to $15,000 in insurance for your totaled vehicle but owe $22,000 on your loan. Gap insurance would pay the $7,000 balance you owe on your loan.

When Is Gap Insurance a Good Idea?

Not everyone needs gap insurance. Situations when it can be smart to purchase it include:

  • You didn’t pay 20 percent or more as a down payment on the purchase of your vehicle.
  • You are leasing your car.
  • You are obtaining a long-term auto loan.

Do you have questions about your car insurance needs? Was your vehicle totaled in an auto accident? Our experienced car accident attorneys are here to explain your insurance options and help you file your claim with your own and the negligent driver’s insurance companies. Fill out our convenient online form to schedule a free consultation with a member of our legal team.