Is Business Gap Insurance Worth the Money?
Answer: If you expect to owe more than the car is worth, due to depreciation, for the majority of the time you expect to have the car, it’s probably worth getting gap insurance.
Better to be safe than sorry. The old saying cannot be truer when it comes to protecting expensive assets of your business. Lots of people invest lots of money for company building, machinery, and such. However, not many of them realize the importance of adequate protection for company cars, vehicles, or fleet. Even though your business is not in a car or truck fleet, but getting insurance for the company’s car is crucial. This is because you cannot predict an accident to happen and if it does, that would cost you a fortune and cause a massive loss for the company.
What is gap insurance?
Speaking of car insurance, it is important to consider gap insurance. Stand for guaranteed asset protection, the gap insurance is an optional coverage that helps the driver to cover the ‘gap’ between the actual car value (ACV) and the financed amount of the owed car, in the event of an accident where the car is considered a total loss. For instance, the car is in an accident and you are not at fault but the car is declared a total loss. In this case, you still owe $15,000 on the auto loan, and by the time of the accident, the car’s ACV is only $12,000. Then, the gap insurance will cover the $3,000 difference.
The importance of Gap Insurance for Business
Most business owners may currently have car insurance as protection. However, car insurance only is not enough. Lots of business owners do not realize that if the company’s car is to be written off, the insurance policy will only cover it based on the current market value of the car. The fact is vehicle value decreases by 70% after three years of use. That is why it is important to have gap insurance to help fill the value difference of the car.
Gap insurance is the best choice if you want to add adequate insurance. Getting the gap insurance from a reputable company should be the best option. In addition, gap insurance is beneficial to cover all of the company’s car and commercial vehicles based on two factors which are the amount that you paid for the car and the amount that you owe on the car.
Insurance pays out
Paying for the car’s accident does not only shake the company finance but also make you struggle to run the business without a car or even find a replacement. A vehicle is an important component for every business as it brings the entire company’s operation to a standstill. If you or employees spend lots of time on the road (which means higher accident possibility), having gap insurance surely will help the car insurance payout.
Do you really need one?
Even though gap insurance is important, however, but it should be applied for specific circumstances only. For example, if you owe the car loan which is worth more the actual car worth, you have an expensive car, and gap insurance is a requirement from the loan or lease, and such.