The Case for GAP Insurance

Most people that buy a car are so happy to have made the purchase that they don't want to think about what could happen if the car is determined to be a total loss in a wreck. Mistakenly, they believe that their insurance will cover it. After all that is why you carry liability coverage, collision coverage, and uninsured motorist property damage coverage, right? What many people fail to consider is will they have enough equity in their car to pay off their car loan in the case it is considered a total loss. You see, in most states, including Washington, you are only entitled to recover the value of your car, not what you owe the bank. What does that mean to you? Well, if you bought that 2008 Escalade for $60,000 plus 6 months ago, you may still owe the bank $55,000. Now, under one of the GM's Red Tag sales that Escalade sells for $49,000. In today's soft car market, you owe the bank $10,000 more than your car is worth. Not a pretty thought, is it? How do you protect against this? Simple. If you buy a new car, or in some cases, a relatively new used car, your insurance company can sell insurance coverage to cover the difference between what your car is worth and what you owe the bank (the GAP). The price is nominal. The peace of mind you derive from having this insurance, is immeasureable in value.

Later,

Rod

Nothing in the Blog should be considered legal advice or to form an attorney client relationship. Readers with legal concerns should contact an attorney who can offer them advice geared toward their particular legal circumstance.

Do you really need the Collision Damage Waiver

Every time I rent a car, I get the same question from the clerk at the counter, " Sir, (I get called Sir now, sure sign I'm close to getting my AARP card) would you like the collision damage waiver.  If you get it, it pays ..........."  Politely, I always tell the clerk, "No thank you, my insurance policy covers the use of a rental car."  Occasionally, when I am at the airport with a friend, that is an insurance agent, I hear a loud shriek, "NOOOOOOO!!!!! He doesn't need it!!!"  Personally, I prefer a simple "No Thank You."

The bottom line is that your auto policy does cover rental cars.  In addition, some credit cards provide this coverage if you book your travel through them.  Call your credit card company to find out. That general statement being made there are some caveats that you should keep in mind:

1. If you are renting a moving truck, some companies will cover small trucks but not large trucks. You can save yourself a lot of heartache by making a quick call to your insurance agent.

2. You may not have coverage if you are in a foreign country. If you are traveling outside the United States, (Yes, that means to Canada and Mexico) let your agent know to assure you have coverage in place.

Later, 

Rod

Nothing in this Blog should be considered legal advice or to form an attorney client relationship. If you have a legal problem you are encouraged to consult with an attorney who can provide you with advice tailored to your legal circumstance.