by me and the sysop

Article by Joyce Racette

Trucks are one of the most reliable vehicles. Those who plan to buy trucks must however, understand that insuring trucks is different from insuring a standard vehicle. And you can start with comprehending what gap insurance is, what it covers, and whether it’s a good choice to have for your truck or not.

Gap insurance

When your car or your truck is considered “totaled” or already beyond repair, gap insurance is used to pay the difference between what the vehicle is worth and the amount you still owe on it.

For example, you paid ,000 for a new truck to add to your collection on Monday, financing the entire purchase price. Come Friday, your new truck gets totaled. The moment you took it out for a drive, your car’s value has already decreased and is already considered pre-owned for insurance company calculations.

This translates to ,000 less its value when you bought it. And since not a month has passed, you have not made a payment yet and already the expenses to the financing process have already accumulated. If you were not able to put money down when you bought the truck, it seems impossible to find the ,000+ difference between its value and what’s needed to pay it off. Gap indemnity handles that for you.

Up-side down purchases

There are times when buyers trade in a vehicle that is not worth as much as what is owed on it. Most of the time, the excess is added into the price of the new car or truck, making the gap between value and cost even wider. This is called an upside-down situation in a loan. When you find yourself in such situation, you would be glad to have gap insurance because starting out with an inflated purchase price means it will take longer for value and amount owed to equalize. The longer it takes for this to happen, the more chances of a loss.

Where to get gap insurance

Many auto and truck dealers also already offer gap indemnity when you buy a new car or truck. However, if you think what is offered to you fits your needs, you should still talk to your existing indemnity agent just to find out if he or she can offer protection. Remember that policies differ, and it’s important to compare costs and coverage.

Theft

If you are wondering if getting your truck stolen is included in a gap indemnity policy, most of the time it is. However, you can never be too sure and so you still need to read policies carefully to determine what events are covered.

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Question by John: Finance agent at motorcycle dealership refuse to cancel GAP insurance?
I financed a brand new 08 kawa ninja 250 yesturday. I signed the contract to have GAP insurance on my motorcycle. However, I changed my mind because it was costing too much. Therefore, I went back today and the same finance agent refuses to cancel my contract on the GAP insurance. His reason was that its already processed and it has to do something with my financing crap.

Best answer:

Answer by kenhebe20
It is true that you cannot cancel it and it is for your own good and for their protection. Without it, let’s say you total out your bike next week. Now let’s say the bike is worth $ 2500, but you owe $ 3500 on it. The insurance company will write them a check for $ 2500, but you stille owe $ 1000 on it even though it has been totalled. Now what is your incentive to pay the finance company on a bike you don’t have? None! That is why they require that so that if such a thing does happen, the finance company has their asset covered and you won’t get screwed.

Know better? Leave your own answer in the comments!