While Florida is known for its warm weather and beaches (and Florida Man), it’s less known for things just as significant: frequent rain and severe weather, and its high rate of motor vehicle accidents.
The most fortunate accident victims leave an auto accident unscathed, with no more than a ding in the fender. Sadly, that is not always the case. Should your insurance company declare your car totaled, it could leave you with no vehicle at all. Worse, the claim may not pay out enough to cover what you have left on a vehicle loan, meaning you still have a car payment, but no car to show for it.
This is where gap insurance can really save your pocketbook. But what is gap coverage? Are you required to carry it? Read on for more information!
Gap Insurance – The Bridge Between Your Loan and Your Insurance Payout
Imagine you bought a new vehicle a year ago. You paid $25,000 for your brand-new car, and you have diligently paid on your loan. A motorist speeds through an intersection and crashes into you, totaling your vehicle. You still have roughly $22,000 left on your auto loan.
Because new vehicles depreciate the moment you drive them off the lot, your vehicle is now worth only $19,000. Your policy pays out that much. But you still owe another $3,000 on your auto loan! The bank will not forgive this amount simply because you have no car. You still need to make your payments until you have paid that last bit of loan.
This is where gap coverage protects you. Your gap policy will step in and pay the remaining $3,000. You might still have a deductible to pay, but that is far less than the balance of the loan.
Are You Required to Carry Gap Coverage? Should You Carry It?
Florida state law does not require you to carry a gap policy. However, there are several reasons you may choose to, especially as a Florida resident.
- Florida can be catastrophe-prone. Flooding, heavy storms, and hurricanes can mean more risk for a vehicle loss.
- Florida has more crashes, and a higher crash fatality rate, than many other states. Protecting yourself can be wise.
- You have a significant auto loan. If you still owe quite a bit on your car, gap insurance can prevent a financial disaster.
- Your auto loan may require gap coverage.
Speak to your insurance company about their gap coverage options. State law requires that the company issuing the gap insurance be licensed by the Florida Department of Financial Services. Additionally, when deciding whether to add gap coverage to your policy, remember to inquire about how Florida’s no-fault laws will affect your payout if you are involved in an accident.
Involved in an Accident? Steven A. Bagen & Associates Have You Covered!
If you have concerns regarding the aftermath of an accident, Steven A. Bagen & Associates can help. We can ensure you receive the compensation that you are entitled to. Contact us today!