It’s time for a new car! You perform the research and find the perfect models that you would like to test drive. And at the dealer you fall in love with the perfect car and make a trade. You may have felt as though you made some difficult decisions when buying the new vehicle, however, this is where the real decisions begin.
When it’s time to drive your new automobile off the lot is it covered under your existing auto insurance policy?
Yes, if you have gap coverage. Most auto insurance policies cover a specific automobile and any losses due to theft or damage of the car. But auto insurers know that cars are bought and sold on a daily basis. That is why they invented gap coverage - so you have adequate insurance on a purchased vehicle that has not yet been added into or switched over on your current policy.
Gap Coverage Limitations
Gap coverage is limited however, and contains some exclusions. What gap insurance will do for you is cover your new automobile in cases of damage from the moment your name is on the pink slip. Comprehensive damages such as fire, vandalism, or weather. Gap coverage also includes collision damage that may be sustained in an accident while driving. But what new car owners should be aware of is the exclusions that gap insurance fails to pay for.
Gap Coverage Exclusions Include the Following:
- Insurance policies that don’t have both comprehensive and collision. Though it is usual and traditional to have both types of coverage, some people opt out of one type of coverage to save money. If a new car is not covered by both types of coverage when it drives off the lot it will likely have problems with gap coverage.
- Non factory-installed equipment. If you buy a used car that had some interior work done by the previous owner, including expensive CD or other entertainment upgrade, the improvements will likely not be covered by gap insurance.
- Extended warranties. Additional costs to the automobile for products like extended warranties are usually not insured by gap coverage.
If you are in the market to purchase a new or used vehicle, make sure you understand gap coverage and ensure that your new car has adequate insurance when you are given the keys.
