Do You Need GAP Insurance? | McAllen, TX
Buying a new BMW at family-owned Bert Ogden BMW is an exciting experience. Even in the age of COVID-19, when we encourage customers to take advantage of our totally online buying experience (Express Checkout), the thought of a new car is a great feeling. But the reality is that there are some less fun things to consider, like how much insurance coverage you will need to acquire.
Many new car buyers ask us whether they need GAP insurance. That comes down to your finances and what your lender may require.
What Is GAP Insurance?
GAP insurance (Guaranteed Asset Protection insurance) is a nice-to-have (and sometimes lender-required) coverage option that helps you in the event that your BMW model is totaled. This is especially important to have in the first few years of ownership. For example, if you take out a loan of $30,000 for a BMW, crash it the next day, and your insurance totals it out but is only willing to pay you $25,000 for it, you are still on the hook for the additional $5,000 to your lender. GAP insurance will pay that “gap” so that you have no financial responsibility, outside any deductibles. Many lenders will require you to carry this over the life of your loan.
What Does GAP Insurance Cover?
GAP insurance will take care of the difference in what you owe and what collision or comprehensive pays out on a totaled vehicle. It typically does not matter how the vehicle is totaled out: collision, weather damage (tornado, hurricane, fire, flood, etc.), theft, or vandalism.
It is important to note, though, that GAP insurance does not reimburse your down payment. In the scenario above, let’s suppose you put down $10,000 and then took out a $30,000 loan, crashed the car, and received $25,000 from insurance. GAP only covers the other $5,000 to pay off the loan, but will not pay you the other $10,000 for your down payment.
Get behind the wheel of a new BMW model at Bert Ogden BMW in McAllen, Texas.