Will gap insurance pay out if I buy the salvaged vehicle from the insurance company?
The ($14,000 value) car was totaled in an accident. I owe more on the loan ($16,000) but have gap insurance. Insurance is saying the value is $14,000, and that I can buy the salvage title for $11,000. Will gap insurance pay $2,000 or not if I accept the salvage offer?
Your gap coverage should still cover the $2,000 owed on the loan regardless of what happens after that. I would definitely check directly with your insurance company to make sure there is no stipulation that prevents this if you choose to buy back the salvage title.
Thanks for reaching out to The Zebra! Let's dive into your question and provide some clarity.First, whether or not you need gap insurance depends on a few factors: whether or not the car is brand new, how much of a downpayment you put down, how well it holds its value, and whether or not gap insurance is a requirement for your specific loan or lease (check the loan contract).The difference between gap insurance and full coverage insurance is:Full coverage insurance combines liability, collision, and comprehensive coverages to provide extensive protection for the policyholder in case of accidents, theft, or damagesGap insurance is meant to cover the difference between what your standard insurance policy would pay out in the event of a claim (market value of the vehicle), versus what you actually owe on the vehicle. Let's look at an example of when this would come into play, even if you already have full coverage.According to Kelley Blue Book, new cars lose about 20% of their value within the first year and can depreciate as much as 60% in the first five years.
Sorry to hear about your misfortune! Luckily enough, you should be able to file this claim through your insurance company assuming that you have comprehensive coverage on your policy. Comprehensive covers most damage to your vehicle that wasn't the result of an accident.
The decision to maintain your auto insurance coverage is really dependent on whether or not you plan to buy a new vehicle in the near future. If you cancel your policy and then buy another vehicle within the next month or two, the insurance rates for that vehicle will be much higher than if you maintained coverage.