You get into a car accident in Texas and find out your car is totaled. If it’s leased or financed, this could be a disaster for your bank account. While you have car insurance, your provider is only going to pay for the car’s actual cash value (ACV).
If you owe more than what your car is worth, you’ll probably be on the hook for the balance of your loan. That’s where GAP insurance can help after a serious car wreck in Texas.
If you added GAP coverage to your car insurance policy, your Austin car accident attorney can help you file a claim to offset the balance between what your car was worth and what you still owe on your car payment.
What Is GAP Insurance?
Guaranteed Asset Protection (GAP) insurance bridges the financial gap between what your vehicle is worth and what you still owe on a car payment after it’s totaled. Often, that gap is substantial, because vehicles depreciate quickly.
Most car owners are upside-down on their vehicles for a long time after purchase because the vehicle’s value drops rapidly while payments don’t knock down principal at the same rate.
So after a crash, your car’s ACV will probably be a lot less than what you still owe on it. That’s true, unless you paid cash or have already paid it off.
Having GAP insurance means you won’t be stuck with a car loan for a vehicle that’s no longer a viable option for transportation. Your GAP coverage will pay off the loan, and you can move forward with buying, leasing, or financing another car.
When dealing with complex insurance payouts following a total loss, consulting a skilled car accident lawyer in Austin can help protect your financial interests.
Do I Need GAP Insurance?
Some drivers will definitely benefit from GAP insurance. Some are even required to have it, including those who opt for a lease. Others don’t need or won’t benefit from GAP coverage.
You might want GAP insurance on your vehicle if:
- You’ve financed a new or used car and put nothing or very little down
- You’re leasing a vehicle, or
- The contract for your car loan is for 60 months or longer.
GAP coverage won’t be applicable if you own your car, because there’s no gap between the vehicle’s actual value and your loan balance since there is no loan.
What GAP Insurance Does and Doesn’t Cover
GAP insurance has one purpose: to cover the difference between your car’s actual cash value and your car loan.
It’s not designed to cover anything else you might have added when you bought your car, such as an extended warranty or credit insurance. GAP coverage also won’t reimburse you for your deductible, pay for loan payments you’ve missed, or provide cash for a new vehicle. Those will still be your responsibility.
Knowing how property damage claims interact with personal injury recovery is something car accident attorneys can guide you through after a severe collision.
A Car Accident Lawyer Can Help You Pursue GAP Insurance Benefits After a Texas Accident
If you added GAP insurance to your policy, it can be a lifesaver when you find out that your car’s a total loss after a crash. Still, the insurance company will work hard to minimize your recovery.
The car accident attorneys at Dow Law Firm can help you navigate the claims process and work toward recovering the full value of your GAP policy benefits.
Contact our Austin car accident lawyers at (512) 240-9951 today to learn more. Your initial case evaluation with our top-rated team is free.