This is my own personal test crash results, as found in the bullpen of a local body shop. Toyota Tundra traveling 15mph hits a Hyundai Sonata also traveling at a low speed. The Hyundai Sonata (original selling price of the v6 = $ 26k), sustained damage exceeding $10k. The insurance company decides to declare the Sonata a total loss. Will the owner buy another Hyundai? DO they have GAP protection? I hope so.
GAP protection is a separate insurance policy sold at the time of purchase by the dealership or by the car owner’s insurance company. If the loan amount is more than the insurance company payout, there’s a “gap”. The GAP policy will cover the difference between what the insurance company will pay on the depreciated value of the 2008 Hyundai Sonata and what the owner still owes on the car loan. The GAP can amount to thousands of dollars, especially where negative balances from previous loans have been added to the new car OR where the new car depreciates very quickly, as noted in this case. Auto leases are also subject to GAP protection. GAP protection is also valuable when a vehicle is STOLEN, never to be seen again. (Recent cases of auto insurance fraud have been tied to owners invoking their GAP protection. But that’s a different story.)
IN this economy, those consumers buying Hyundai’s, Kia’s, and soon to be discontinued makes and models: Saturn, Pontiac, Mercury, etc., should strongly consider adding GAP to their insurance if it’s not in their loan documents. There is no such thing as “replacement” value insurance on cars, so beware, a car accident (even one that’s not YOUR fault) could cost you thousands of dollars without GAP protection.
Other option: Buy a car that doesn’t depreciate 50% in one year, takes a hit and you can payoff quickly.
———————————————————————————————HAD an accident recently? Watch OUT for INSURANCE COMPANY BODY SHOP STEERING. CLICK TO READ MORE HERE!
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Top learn more about getting your best car deal click here: CAR DEALS Sarah Lee is an automotive executive with 20+ years of experience. She writes about cars, and is a staunch consumer advocate on car related subjects. Her company: MY CARLADY is a car buyer’s service committed to getting you the best deal on your next new or pre-owned vehicle. You can reach her at www.mycarlady.com]]>