What is Gap Insurance?

car accident

Purchasing a car comes with the need to make sure it’s properly insured. While there are insurance requirements that vary by state, there are also optional insurance policies like gap insurance. What does gap insurance do? Gap insurance helps cover the difference between the cash value of your vehicle and what remains on your auto loan. Get answers to questions like, What does gap insurance cover,” and more with this guide from the Mercedes-Benz of Eugene finance team!

What Does Gap Insurance Do vs. Other Insurance Types?

Vehicles depreciate with age and use, sometimes leaving drivers with a vehicle that is worth less than what they owe on their auto loan. In the event of a problem with your vehicle, gap insurance covers the difference, so you’re not left paying on a vehicle you can no longer drive. 

What Does Gap Insurance Cover for Your Vehicle?

Gap insurance is designed to cover your vehicle, not property damage or bodily injury. While you’ll want to look over your policy for specifics, you can generally expect the following from gap insurance coverage: 

Gap Insurance Will Cover:

  • Theft
  • Accident
  • Vandalism
  • Fire
  • Tornado, hurricane, flood, or other acts of nature

Gap Insurance Will Not Cover:

  • Death
  • Extended warranties
  • Engine failures 
  • Mechanical repairs/malfunctions
  • Deductible (though some gap insurance policies allow this)

Should I Get Gap Insurance?

While gap insurance isn’t required, it can be a smart addition, especially if your dealership offers a plan that includes deductible coverage. Having this insurance will help protect you financially in the event you’re in an accident, and provide peace of mind during your Albany commutes. 

Discover More Finance & Insurance Options at Mercedes-Benz of Eugene

No matter if you have a new vehicle in your sites, or are just starting to look, the Mercedes-Benz of Eugene finance center can make the car buying process easier with our car buying tips and expertise! 

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