Will Gap Insurance Cover a Blown Engine? - An Expert's Perspective

Gap insurance is an optional coverage that can be included in an auto insurance policy. It is designed to pay the difference between the book value of your car and the amount you still owe for it, in the event that your car is totaled or stolen. Unfortunately, Gap insurance won't provide protection for engine faults. It only covers the gap between the loan balance and the value of the car if it is destroyed or stolen and is covered by comprehensive or collision insurance, or by the at-fault driver's liability insurance. If you have this type of coverage, it will pay the difference between the book value of your car and the amount you still owe for it.

This type of insurance is something that drivers who finance or lease their vehicles should consider if they are worried that their loan or lease will be “upside down” if their car is destroyed in an accident. A GAP insurance policy is an optional auto insurance coverage that helps pay off your car loan if your car is totaled or stolen and you owe more than its depreciated value. Let's look at an example of how gap insurance can protect you when you owe money for your car and it gets stolen or destroyed. Comprehensive coverage covers a vehicle that is stolen or damaged by something other than a collision or rollover, such as a busted engine. If you make a decent down payment, your vehicle doesn't depreciate at a constant rate, and you pay off the loan balance every month, you usually won't need gap insurance coverage. In addition, engine damage caused by an accident or an event covered by comprehensive insurance could contribute to the “total” designation.

By calling the other party's insurance company, you risk that your claim will be denied or that you will be found at fault for the accident. A full-coverage car insurance policy can include four common insurance coverage options that will cover repairing your car if you're involved in an accident or if your car is damaged due to a covered claim. So, if within the year following financing, leasing, or refinancing your vehicle you know that you owe more than its ACV coverage, it could be beneficial to purchase gap insurance. The claims service agent or representative will be happy to talk to you about your coverage and will tell you for sure if it would be worth filing a claim. If you paid for your gap insurance policy in full, you should contact the company that sold you the policy to see if they can refund any unused premium when you change or cancel your car.

Gertraude Jackel
Gertraude Jackel

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