Gap Insurance: 5 Shocking Facts That Will Ease Your Worries

Buying a car in Fort Sask? It’s exciting! But what if something happens and your vehicle is stolen or badly damaged (a “total loss”)? Could you end up owing money for a car you can’t even drive anymore? This is a real worry for many. That’s where Gap Insurance can help. At Farnese Insurance Brokers in Fort Saskatchewan, we want you to understand this important coverage. Let’s look at 5 surprising things about Guaranteed Asset Protection (GAP) Insurance that can calm your fears.

When you get a loan or lease for a vehicle, especially a new one, you often owe more than the car is worth for a while. This is sometimes called being “upside down.” If your Automobile is written off after an accident, theft, or other damage, your regular car insurance usually only pays what the car was worth. This value is called the Actual Cash Value (ACV). It’s often less than what you still owe on your loan or lease. The money do you still owe after the insurance pays out? That’s the “gap.” Without Gap Insurance, you have to pay that gap yourself.

Fact 1: Cars Lose Value Super Fast

It’s true! The value of a new car starts dropping the second you drive it. Experts who study car values in Canada say a brand-new car can lose 15% to 25% of its price just in the first year. This fast drop means that if your car is totaled soon after
you buy it, you’ll likely owe much more than your regular insurance will pay. Gap Insurance steps in to cover this difference.

Fact 2: Your Normal Insurance Misses the “Gap”

Your regular collision insurance and comprehensive insurance cover damage to your car. They pay up to the car’s market value (ACV). But they don’t pay off your loan or lease balance if it’s higher than the car’s value. If your car is worth $20,000 when it’s totaled, but you still owe $23,000, your regular insurance might pay $20,000 (minus your deductible). You’d still owe $3,000. Gap Insurance covers that extra $3,000.

Fact 3: You Could Pay for a Car You Don’t Have

Imagine your car is stolen in Fort Sask and never found. Or it’s damaged so badly that it’s written off. You no longer have the vehicle, but if you owe more than it was worth, you still have to pay for a car that is gone. This can mean owing thousands of dollars. Gap Insurance stops this from happening.

Fact 4: Risks Like Theft Are Real

Car theft is a significant concern in Canada, with claims costs rising sharply over the past decade. This underscores the importance of Gap Insurance. Being prepared for the unexpected can protect your finances and help you stay one step ahead. Don’t let the threat of theft catch you off guard—make sure you’re covered! Gap Insurance gives you important protection if the unexpected happens.

Did you know: According to IBC “Looking at recent data from Canadian insurance industry reports, auto theft remains a significant issue, with substantial increases in the cost of theft claims across the country over the past decade.”
Source: IBC

Fact 5: Leasing Still Means Risk

Many people who lease a car think they do not need Gap Insurance because they do not own the vehicle. This is not always true! Most lease papers say you must pay the difference if the Automobile is totaled and the insurance payout is not sufficient to cover the rest of the lease. Sometimes, having Gap Insurance is even required in the lease contract. Always read your lease papers carefully.

Driving in Fort Sask? Make Sure You’re Covered!

Driving your car in Fort Sask should be fun, not a source of worry. Don’t let the fear of losing money on a totaled auto spoil the fun.

• Protect Your Money: Don’t get stuck paying for a car you no longer own.
• Feel Secure: Drive with peace of mind, knowing you’re protected.
• Plan Smart: Gap Insurance costs a little but could save you a lot.

Get Gap Insurance Help from Farnese Insurance Brokers in Fort Sask

At Farnese Insurance in Fort Saskatchewan, we truly understand the needs of local drivers. Our mission is to guide you through the world of insurance, including the ins and outs of Gap Insurance, and help you discover the perfect plan tailored just for you. With our approachable team of brokers by your side, you’ll receive personalized support every step of the way, ensuring you have the protection you deserve. Let’s work together to secure your peace of mind on the road!

Questions About Gap Insurance?

Q: What exactly is Gap Insurance?
A: Gap Insurance pays the difference between your car’s market value (what your main insurance pays) and what you still owe on your loan or lease if your car is a total loss.

Q: Do I have to get Gap Insurance in Alberta?
A: No, the law in Alberta doesn’t say you must have Gap Insurance. But lenders or leasing companies often require it, especially for new cars.

Q: Should I get Gap Insurance?
A: Think about Gap Insurance if you put down a small payment, have a long loan term, or drive a car that loses value fast. It’s most helpful in the first few years you own the car.

Q: How much does Gap Insurance cost?
A: The price of Gap Insurance changes based on your car and where you live. But it’s usually a small cost compared to how much it could save you if your vehicle is totaled.

Q: Where can I get Gap Insurance in Fort Sask?
A: You can get Gap Insurance through your car insurance company, like Farnese Insurance Brokers in Fort Saskatchewan. Sometimes you can get it at the dealership too. Talking to a trusted broker is a good way to see your options.

Final Thoughts

Knowing about Gap Insurance is important for anyone buying or leasing a car in Fort Saskatchewan. The chance of owing more than your car is worth after a total loss is real. But Gap Insurance gives you a safety net. It protects your money and lets you drive without this big worry. Don’t wait – contact Farnese Insurance Brokers in Fort Sask today to learn more about Gap Insurance and how it can protect you.

 Get a free car insurance quote today!