Gap Insurance and How it Can Help in Motor Vehicle Accidents
Motor vehicle accidents are an unfortunate reality that can happen to anyone. In the event of an accident, it is not uncommon for the car to be totaled, and in some cases, the insurance company will not cover the full cost of the damage. This is where gap insurance comes in; it helps to cover the difference between the car's value and the outstanding balance on the loan or lease.
In this article, we will discuss what gap insurance is and how it can help you in the event of a motor vehicle accident. We will also touch on the importance of having gap insurance as part of your insurance policy and why it is essential to work with an experienced personal injury attorney in Orlando, Florida, to ensure that you receive the compensation you deserve.
What is Gap Insurance?
Gap insurance is an optional coverage that can be added to your insurance policy, which covers the difference between the value of your car and the amount you owe on your car loan or lease. This is important because, in the event of an accident, your insurance company may only pay for the value of your car at the time of the accident, which may be less than what you owe on your loan or lease.
For example, suppose you have a car loan of $20,000, and the value of your car is currently $15,000. In that case, if you get into an accident and your car is totaled, your insurance company may only pay you $15,000, leaving you with a $5,000 balance on your car loan. Gap insurance would cover this $5,000, ensuring that you do not have to pay out of pocket for the remaining balance.
What Does Gap Insurance Cover?
Gap insurance covers the difference between the value of your car and the amount you owe on your car loan or lease. This coverage applies to the amount that you still owe on the loan or lease, not any additional expenses you may have incurred as a result of the accident.
For example, if you're in an accident and the total cost of the damages is $25,000, gap insurance would only cover the difference between the value of the car and the amount you owe on the loan or lease. It would not cover any additional expenses, such as your deductible or medical bills.
How Does Gap Insurance Work in a Motor Vehicle Accident?
In the event of a motor vehicle accident, gap insurance will come into play if your car is deemed a total loss by your insurance company. A total loss is when the cost of repairing the car is more than the value of the car. In this case, the insurance company will pay you the value of the car at the time of the accident, minus any deductible.
Suppose the value of the car at the time of the accident is less than the outstanding balance on your loan or lease. In that case, gap insurance will cover the difference, ensuring that you do not have to pay out of pocket for the remaining balance.
It is important to note that gap insurance only applies to the outstanding balance on your car loan or lease. It does not cover any other costs, such as your deductible or any additional expenses you may incur as a result of the accident.
Why is Gap Insurance Important in Florida?
Gap insurance is essential for those who have a car loan or lease, as it can help protect you financially in the event of an accident. Without gap insurance, you may be left with a significant financial burden if your car is totaled, and the insurance company only pays for the value of the car at the time of the accident.
This is especially important for those who have just purchased a new car, as the value of the car depreciates quickly in the first few years of ownership. According to Edmunds, a new car loses approximately 20% of its value in the first year of ownership, and up to 30% in the second year. This means that if you get into an accident during this time, your car's value may be significantly less than what you owe on your loan or lease.
Gap insurance is also important for those who have a long-term loan or lease, as the outstanding balance may be significant. In this case, gap insurance can help cover the remaining balance, preventing you from having to pay out of pocket.
How to Purchase Gap Insurance in Florida
If you're interested in purchasing gap insurance in Florida, there are several options available to you. You can purchase gap insurance from your car dealership, your insurance company, or an independent insurance agent.
Before purchasing gap insurance, it's important to shop around and compare prices. You can also ask your insurance company or agent for recommendations on how much coverage you need and what type of policy is best for you. In addition, make sure to read the policy carefully and understand the terms and conditions before signing up for gap insurance.
If you're purchasing a new car, your car dealership may offer gap insurance as part of the financing package. However, the cost of gap insurance from a car dealership is often higher than the cost of purchasing it from an insurance company or independent agent. It's a good idea to compare prices and make an informed decision.
You can also purchase gap insurance from your insurance company or independent agent. If you already have car insurance, ask your provider if they offer gap insurance and what the cost would be to add it to your policy. If you're purchasing a new car and need insurance, you can shop around for quotes that include gap insurance as an option.
Working with an Auto Accident Attorney in Orlando, Florida
If you have been in a motor vehicle accident and have gap insurance, it is important to work with an aggressive and skilled personal injury attorney. A good lawyer can help you navigate the claims process and ensure that you receive the compensation you deserve.
Your lawyer can also help you determine whether or not you have a case against the other driver involved in the accident. If the accident was caused by the negligence of another driver, you may be entitled to additional compensation for your medical bills, lost wages, and pain and suffering. Whether you can recover money for these types of damages may depend upon whether the other driver has bodily injury coverage, but that’s a topic for another article.
Additionally, your lawyer can help you negotiate with the insurance company to ensure that you receive a fair settlement. Insurance companies are for-profit businesses, and they will often try to settle for the lowest possible amount. In other words, they don’t want to pay you anything. However, your lawyer can help you fight for the compensation you deserve.
Finally, your lawyer can help you understand your insurance policy and ensure that you have the right coverage in place. They can review your policy and make recommendations for any additional coverage you may need, such as underinsured or uninsured motorist coverage.
Contact An Orlando Car Accident Lawyer for Your FREE Legal Consultation
If you have been injured in a car accident in Florida as a result of a careless or negligent driver, you should speak with an experienced Florida car accident attorney as soon as possible because you may be entitled to compensation. You can contact us online or you can call our Orlando, Florida law office at (321) 352-7588 to schedule your consultation.
If you need a South Carolina car accident lawyer, please don’t hesitate to reach out to us at (843) 638-6590. We have at least one lawyer licensed in Florida, Georgia, South Carolina, and North Carolina.
