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Gap Insurance

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  • Progressive does. Saved me a lot of hassle when my first car was destroyed. I thought all insurances offered gap.
  • spikaelspikael Posts: 3
    edited March 2013
    I think I'm stuck. I turned down Gap insurance at the dealer since it would have to be paid out of pocket and everything I read said the dealer would be overpriced. Now, the lender says it's too late one week later, the dealer says the lender won't let him add it for the same reason on his end. My insurance (Geico) doesn't offer it. I looked at switching but either the other companies don't offer it or it has to be done at the time of sale or be a year or two old at the most. I checked for standalone and one is not offered in NC and the other is not taking new customers. My credit union offers it only if you finance through them. I can refinance through them but not until 6 months after I establish on time auto payment history (first car loan) and clean up a few things on my credit.

    I feel like I've exhausted my options. Any other ideas other then holding out and refinancing with them? The window for them opens up again then. I just don't want to feel paranoid driving all the time.
  • ken117ken117 Posts: 178
    A question to ask is how long have you been driving and how many times have you totaled a car? GAP is very expensive insurance for a rare event. The shear amount of profit a dealer makes on GAP makes it poor way to spend money. Do you really need GAP or are you falling victim to the dealer's fear mongering?

    Personally I have been driving for fifty years, my wife for forty fiver, and my children for up to fifteen. Never a single car totaled. We are not unusual.
  • spikaelspikael Posts: 3
    Thank you Ken. That's a very good point. I think it's more the fear of someone else's stupidity that has me on edge. I've been driving for 15 years and have never totaled a car. Only had two accidents ever. Rear ended twice from people following too close that were very minor and not reported. I consider myself a good driver and very cautious. I had a coworker who ended up upside down not long ago so I think that had me.worried too but then again our driving styles are completely different. :)

    Thank you for your much needed rationale.
  • carthellcarthell Posts: 124
    I live in an urban area. Having gap for my first car saved me a few years of taking the bus to work when my car was taken out. 2nd car, I cancelled the coverage as soon as I was financially comfortable with paying off the car note.

    If you don't have savings and don't live in a rural area, you should consider gap. In the meantime, the original poster should straighten out his or her credit situation ASAP so that when the opportunity to refinance comes, a lower interest rate can be offered with the gap insurance.
  • marsha7marsha7 Posts: 3,661
    is certainly useful if your outstanding balance is much higher than the car is worth, esp if you rolled over negative equity from a previous car loan...ken117 has a good point, but I have always bought Gap coverage simply because I usually put low down payments, so, driving off the lot I am already in negative equity...

    To some, it is a ripoff...I will gladly pay $400.00 over the life of the loan to save the $4-6,000 I may owe in the event of a total...I have been driving for 45 years, and have never totalled a car, but I see clients who do, and totalling happens more often than you think...

    It is like any other insurance...you can buy or gamble without it...if you need it and don't have it, you will kick yourself for not buying it...if you never need it, you have beat the system...

    Same reason why some folks buy life insurance and some don't...one can argue that every year you don't die you have wasted your money, I just think it is prudent to buy it...same with extra liability insurance (high limits) and Gap insurance...

    Folks lived w/o gap for years, as it used to be available only on leases...now it is available on leases and purchases, and I think it is worth it...but, like ken117, you may not...
  • igozoomzoomigozoomzoom Waleska, GeorgiaPosts: 790
    Very good point in making the comparison carrying high liability limits, it's well worth the money for the peace of mind it gives you knowing that you are very well protected! People look at me like I just bought a bag of magic beans when they find out I carry 500/500/100 limits for liability and the same limits for Uninsured/Underinsured Motorist coverage. But once you pass 100/300/100, higher limits only cost a small percentage for each increment.

    For some reason, some of the HUGE insurance companies (State Farm & Allstate, in particular) insure a customer with decent liability limits (100/300/100 usually) but only 25/50/25 (minimum) UM/UIM! I quote several customers a week who are currently with either of them and I rarely see higher limits for UM/UIM. The few times that I have had one of their current customers with higher limits it was because they were informed enough to ask for it! I always quote with higher than average liability limits and matching UM/UIM limits. It's cheap coverage and why wouldn't you want the same amount of protection for you and your passengers that you have to protect a stranger?

    I'm also a firm believer in GAP coverage, and you can buy it from your auto insurance company cheaper than the dealer's finance department. It will also be very simple to drop a few years down the road when has no value because the loan balance is much lower than the value!

    But a BIG FYI for anyone with negative equity being rolled into you new loan-- read the fine print and the entire, dreadfully boring policy to make sure you are fully covered!

    Quite a few insurers stipulate that their GAP coverage will only cover what they calculate as the difference between ACV and your loan balance MINUS the negative equity from a previous loan!!! The only upside of insurers makign this exclusion is that the coverage is less than half the price of GAP policies that will cover the full loan balance after the at-fault's insurer pays. But I just want people to be certain they actually have the coverage they think they have!

    Most people would rather have their fingernails pulled off with pliers rather than read their insurance policies. That's where a genuinely good agent comes in very handy! Once you find the an agent who actually cares about protecting you, your family and your assets, they'll always have your back!
  • ken117ken117 Posts: 178
    Have to diagree about GAP insurance in many instances. Never if the GAP is purchased from a dealer.

    Generally on a purchase of a new vehicle the vehicle is purchased well under MSRP and usually with some additional money down or a reduction due to the value of a trade. In such cases, the actual difference in value covered by GAP would likely be $2,000 or less. I recently bought a new vehicle and the GAP coverage offered by the dealer was priced at $600. Spending $600 for potentially having to come up with $2,000 or less is not prudent.

    On the other hand, for purchases and leases with no down payment or, heaven forbid, little reduction from MSRP, GAP might be beneficial. But only, as you mention, if purchased away from the dealer. And with many leases, GAP is already included.

    People buying vehicles need to be cautious about spending money in response to the fear of a future event. Dealer F&I people are well trained in using such fear as a selling technique. Purchases made under such conditions are usually regretted at a later date, after the person has had sufficient time to consider the purchase.

    As you mention most of the F&I products, like GAP or the service contract, can be purchased eleswhere for considerably less money.

    It always amazes me how people will fight hard to save an extra couple of hundred dollars on the price of a vehicle but will pay hundreds or thousands for various overpriced products in the box.
  • Has anyone heard of this company, gapdirect.com?
    Are they legit??

    They offer $185 gap insurance. Trying to decide if I should get dealership gap or go with gapdirect.com.

    Any advice??

    Thanks
  • Looks like they only offer it in seven states.

    Cheaper than what the dealer will offer, I bet.

    Moderator - Prices Paid, Lease Questions, SUVs

  • I looked up the company via the California Dept. of Insurance, insurance.ca.gov. (Tip: always use a state insurance regulation web site to get preliminary info about a insurer.) The backing company, Western General, has operated in the state since 1973. Right now, the premiums earned vs. losses (and related expenses) related to underwriting put the company in a $2.6 million hole as of 3/31/13. The company appears to have sold some assets and is using its surplus pool to cover the loss ($20 million after deductions). According to their financial statement, the company's underwriting loss was $6 million for 2012.

    They're a small company. If they had $100 million in bonds, I'd feel better about their position. They have about $30 million in bonds, and $5+ million in cash.

    So based on the financial documents, they appear to be legitimate. I'd see what A.M. Best says about the company's financial stability. You can get the information for free if you register.
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