If you have a new car and starting to decide what kind of insurance you will need, take some time to consider and study your options. Perhaps your dealer or your auto insurance already mentioned the most common insurance people in your position have taken, the GAP insurance. They might also have briefed you already of how it works. And it all sounds great alright but do you really need it?



The requirements

Gap insurance will be required if you had your car through a lease agreement. As you already know it, this kind of insurance is considered to be the best protection you can give your new car and that is one great reason for having it. Remember that you do not technically own the vehicle yet, you are completely responsible for all the financial costs of the car. Because of this, the gap insurance is almost always incorporated in the lease agreement and lease terns.

Your rights

Other than the lease agreements, gap insurances are not really required. However, you should be wary because there are some car manufacturers and dealerships or car loan departments that automatically include gap insurances to your loans. The more shocking thing is buyers are not commonly informed about such terms. Whenever you purchase a new car, you always have the right to deny gap insurances as a consumer. But do note that whatever decision you choose to have, it should be primarily based on your needs.

When to deny gap insurance

True enough, gap insurance is helpful especially on car leases. But there are circumstances that give the go signal to decline gap car insurance offers. First, if you are financially confident that you can take care of the gap in the insurance payoff and the value of the car, then you can go away without the GAP insurance. Second, determine whether your dealership already provided the gap insurance, or similar loan pay off type of insurance in your car's auto insurance policy. If something like the GAP insurance is already included, then there's no point going to an insurance company asking them to give your car GAP insurance, is there? Finally, there are some loan companies that are ready to pay off the loan agreement. It means that your loan company may already take care of the gap value. Also, be aware if you were able to purchase the car on its exact price that when it's already totaled, the value of the car is the same as the value of the loan payoff. You will not be needing GAP insurance when this happens.

Refusing the gap

Before you sign your loan payments, make sure that the things in it are the things you authorized. If you do not want GAP insurance, then it should not be included there. If you are still having problems paying for something you did not authorize, contact your state insurance commissioner for professional help. They can also back you up in securing your rights to refuse gap insurance.