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Can GAP insurance replace my vehicle after an accident?
My car was totaled in an accident and I have gap insurance. Will it pay for a new car?
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“The purpose of
gap insurance
is to pay the difference of what you owe on your loan versus the actual cash value of your vehicle. To this effect, it will not pay for a new vehicle.If you’re
upside down on your car loan
, you could end up owing more on your loan than your vehicle is worth. Gap insurance is your protection against this.For example, if you owe $20,000 on a loan but your car is only worth $18,000, Gap insurance would pay the $2,000 difference that would remain on your loan balance after your car insurance payout.
When you purchase your next vehicle, you may want to consider new car replacement insurance on top of collision and comprehensive coverage. Use the
Jerry
app to compare rates and get the best rate for your new vehicle.”View full answer
- Gregory R.
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