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Gap Car Insurance Washington DC

Reader’s Question:

I currently have a financed car which I already have insured here in Washington, DC. How important is having gap insurance now that I am just leasing my car?

Orlando

Washington, DC

Although gap insurance could sound insignificant, it is a must if you have a financed car there in Washington, DC. Gap insurance gives protection on what conventional car insurance would not cover. Meaning, this will close the gap between what your insurance provider would shell out if your vehicle is stolen or totalled and what you financed from the mortgage company. For instance, you car is worth $15,000 and you are paying $500/month with a 5% interest rate. Unfortunately (knock on wood), you got into an accident; you were fine, but your car was declared totalled.

Your car insurance provider tells you that at the moment the accident occurs, the vehicle’s value was only $12,000. But the mortgage company would still like to have the whole amount you financed from them; with everything included – tax, interest and other fees, they determine that it is $16,500. So there would be a gap of $4,500 between the $12,000 your insurer is ready to pay you and the $16,500 that the mortgage company is insisting. The difference of $4,500 is what the gap insurance would cover in case anything like this happen.

Tags: car insurance, gap insurance