What Does Gap Insurance Cover?

If you’re thinking about purchasing an automobile with us at Honda of Chantilly, it’s essential to get enough car insurance coverage. Buying a new or used vehicle means you’ll need to get full coverage. But in some situations, your auto insurance company may not cover the total value of your set of wheels. Don’t worry—we’ll explain what you can do to protect your finances. 

What Is Gap Insurance?

Gap insurance, also known as guaranteed asset protection, is coverage that pays off the difference in the balance during the claim process. If you’re still making payments on your set of wheels, the collision coverage on your policy will pay for the damage to your vehicle. If the incident renders an automobile a total loss, the insurance company will pay your lender the amount of money that’s on your policy limits. For example, the minimum property damage limit in Virginia is $25,000. If you’ve chosen that coverage level, your insurance provider will cut a check for $25,000 to the finance company when the fair market value of the vehicle exceeds your coverage limit. When the loan’s balance is more than the awarded claim, you’ll be responsible for what’s left on the account. Gap insurance will pay for what’s remaining.

Does Gap Insurance Work with Liability-Only Coverage?

Liability-only auto insurance covers property damage to the other driver’s ride and injuries of anyone in another motorist’s vehicle when you’re at fault in a collision. This coverage won’t pay for damage or injuries you sustain in an accident. Therefore, you won’t be able to fill a claim. If you’re at fault, gap insurance won’t compensate you for the damages to your set of wheels. However, if another driver is at fault, their car insurance company can cut a check to you or your lender for the value of the ride. Anything left over could be covered by gap insurance coverage. In most cases, your lender will require you to keep full coverage on your vehicle to reassure that the asset is taken care of, just in case an incident occurs. 

Our Finance Department

Before you drive off the lot, you’ll need to get your vehicle insured. Whether you’re adding a new automobile to your policy or starting with an insurance provider, our Finance Department can walk you through the steps. If a gap insurance policy is too expensive with your provider, we may be able to offer a better deal. The financial experts at Honda of Chantilly can connect you with a plan that keeps you covered at a reasonable cost. When your coverage level isn’t enough, our dealer can enroll your vehicle into force-placed insurance. This coverage is maintained by the loan servicer and allows them to file a claim on a vehicle that’s been declared a total loss. We recommend that you stay current with your monthly insurance payments, so you can avoid additional charges. For answers to more frequently asked questions, contact us online.

It depends on the insurance company, but in most cases, yes. Gap insurance isn't usually included in your car insurance policy, even if you have full coverage. Ask your insurance provider to add to your list of coverages. If you're concerned about having more than enough, raise your coverage level from low to medium.