Let Middletown Honda Advise You on Gap Insurance
There are many important things to consider if you are going to lease a vehicle from your Honda dealer in Middletown, NY. One of the most important items that you need to consider is gap insurance coverage. Not many people know what gap insurance is, and here at Middletown Honda we want you to know how to make sure you’re protected in case of an accident.
Gap insurance is just what it sounds like: coverage to protect you if there is any gap between what your original insurance plan covers and what you still owe the lender. If you happen to have an accident in your car, you may owe money to the financiers, and this amount may be more than what the insurance company is offering you for the price of your car. Gap insurance helps ensure that you don’t get stuck with a hefty bill like this.
What is Gap Coverage and What Are the Benefits?
Let’s go through an example to demonstrate what gap insurance coverage is. Imagine that you just signed a new lease on a $30,000 vehicle. Two months later, a large storm rolls through town and a tree falls on and completely totals your car. Since your vehicle was only worth $25,000 at the time due to initial depreciation, your primary insurer only offers you that amount on your policy. However, you still owe the finance company $30,000 — that missing $5,000 all falls on you to pay unless you have gap insurance coverage. If you do, the gap coverage will step in and cover the $5,000 that you are liable for.
Many times gap coverage is mandated in the lease terms to help protect all parties involved. You need to be in compliance with all terms of the lease, and a gap insurance policy may not be honored if you don’t have collision and comprehensive insurance coverage as well. Additionally, you need to know exactly what is covered and what is not, and at Middletown Honda we can help explain all coverage options. Gap coverage is also a smart idea for people that are going to purchase a vehicle — not just those planning on leasing — as it can help cover you during the first few years when you owe more than the vehicle is worth.