Blogs and Resources - LA Insurance

So, what is gap insurance coverage? When you buy a car with a loan, the value of it drops quickly over time. And unfortunately, if an accident totals it, standard auto insurance covers only its actual cash value (ACV). But what if you owe more? That’s where gap coverage helps. For example, you owe $30,000, but your full coverage auto insurance pays you $26,000 after depreciation. Gap insurance covers the $4,000 difference. 

Gap insurance (short for Guaranteed Asset Protection Insurance) helps cover the difference between what you owe on a car loan and the vehicle’s actual cash value if it’s totaled or stolen. However, many drivers have numerous questions about this policy, one of the most common being the circumstances under which gap insurance does not pay or provide coverage. It doesn’t pay for partial damage, a lapsed policy, or if you have missed payments. It also won’t cover negative equity from a previous loan, fraud, intentional damage, or damages caused by activities like ride-sharing.

If you have a car, there’s no alternative to understanding liability car insurance coverage. It protects you from financial losses if you’re at fault in an accident. If you hit someone else's car on the road, it may cause property damage, severe bodily injury, or both. In such a case, the other driver may also sue you depending on the severity of the damage, which will add up to legal expenses. But who will pay for these expenses? The answer is auto liability insurance. So, what does auto liability insurance cover and what does it leave out? Any guesses?