What is Gap Insurance?
The moment you drive a new vehicle off the lot, your auto insurance policy is probably inadequate to protect you financially in the case of a total loss. This is because your regular policy is designed to pay for your vehicle’s current value—not the balance you owe. If your vehicle is stolen or damaged beyond repair during the lease or loan term, standard insurance coverage pays for the actual cash value of the vehicle.
The problem is that there is usually a gap between the insurance payment and the balance owed on a lease or loan. Gap insurance is useful in cases where the amount you owe on your vehicle exceeds the diminished value of your vehicle. If that happens, don’t assume you’ll be fully compensated by your auto insurance policy. If you don’t have gap insurance coverage and your car is totaled or stolen, you may end up owing more money on the car than you’d receive from your insurer.
How Does Gap Insurance Work in Florida?
Gap insurance is not required by Florida law, but some drivers are required to pay for gap insurance as a condition on their lease or auto loan. If you loaned or leased a fairly new vehicle, gap insurance can be valuable because you may owe more money on the car than the car is currently worth, as measured by the vehicle’s actual cash value. As your car ages, its value drops quickly, and most policies only cover a vehicle’s current value. Once you have gap insurance, make sure to periodically monitor your vehicle’s change in value over time and compare that to your loan balance. As soon as you’re no longer “upside down” (you owe less than your car is worth) you can go ahead and remove gap insurance coverage from your vehicle.
If your car has lost value due to the negligence of another driver, you should consider talking to a car accident lawyer to learn what your rights and obligations are under the law. Let the personal injury attorneys at Suarez & Montero review the circumstances of your case and discuss your legal options. Our attorneys are ready to provide proven legal representation in pursuing your claim and stand ready to protect your rights.
Contact us today at 786 Lawyers for a free consultation!
