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Old August 8th, 2001, 07:08 AM   #1
Magic Mtn Dan
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Ever hear of GAP Insurance?

Question: When I purchased full coverage auto insurance, I expected that my car loan would be paid off if the car was totaled. So how is it that when my car was totaled, the insurance company would only pay me the car's market value?

Stacey, Mississippi

Answer (from Auto Insurance Forum):
When your car is totaled, your insurer is not obligated to pay you the amount you still owe on the loan. "Full coverage," or collision and comprehensive insurance, simply mean that your insurance company must give you a check representing the car's actual cash value that is, the amount the car was worth before the accident. You are still responsible for the amount outstanding on the loan.

The only way to cover the difference between the car's cash value and the amount you owe on the loan is to purchase gap insurance. Available to cover auto leases and auto loans, gap insurance covers you if your car is totaled before you've paid off the loan, or before the lease term is expired.

from: http://www.insure.com/auto/forum/073001/gapinsurance.html

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Old August 8th, 2001, 07:24 AM   #2
Eric B
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Re: Ever hear of GAP Insurance?

There is another alternative, called agreed value. When I bought my '99 boxster, I got agreed value insurance for $50,000, so if the car gets totalled, I get the $50,000 back. Only costs me a little more per year than a regular policy

My insurance is chubb.

-Eric


www.chubb.com
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Old August 8th, 2001, 07:25 AM   #3
ldye
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Re: Ever hear of GAP Insurance?

Most GAP insurance is taken out on lease contracts. This is where you find that insurance value on the car is less than buy out of a lease. Most insurance companies can offer this for less than a leasing company or car mfg. I took out GAP on a leased Toyota 4 runner few years ago and I think it cost about $12.00 per year. Toyota wanted $450.00 for a 3 year lease.
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Old August 8th, 2001, 08:42 AM   #4
Yoseif (01 AS/MB/MB)
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Re: Ever hear of GAP Insurance?

That makes sense: your insurance and your loan and nothing to do with each other. Otherwise, someone who paid cash would have more coverage than someone who had a loan. That wouldn't make any sense.

Yoseif
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