If your car becomes totaled in a crash and its value is less than the amount still owed on your loan, the remaining balance will need to be paid. This balance could be significant, ranging in the thousands of dollars. In these situations, having gap insurance has its advantages.
Gap insurance is a commonly overlooked and optional form of auto protection in Maryland. Many drivers may not even know if they have this coverage. Gap insurance can provide financial security in the event of an accident resulting in serious property damage, especially if driving a newer car.
Peter T. Nicholl Law Offices discuss how gap insurance works and its advantages, as well as how it differs from liability insurance. We have helped many accident victims seek maximum compensation for their damages for more than three decades. Our initial consultations are complimentary and confidential.
If your car is declared a total loss, gap insurance could help pay the difference between what the insurance company will pay for the car and the current outstanding balance of your loan or lease.
A loaned or leased car is only declared totaled when the insurance company decides that a car is not worth being repaired. Generally, this means that the damage exceeds 75 percent of the actual case value of the car.
The insurance company will pay for the actual cash value of your car at the time of loss based on the extent of your coverage. Some insurers may even offer a replacement cost endorsement to provide you with a new car as a replacement for the damaged one.
Gap insurance is available when physical damage coverage is included in an insurance policy. This is otherwise known as collision and comprehensive coverage. Collision coverage protects you from costs related to the damage of your car in a crash while comprehensive coverage protects you from costs related to damage caused by other covered incidents, such as theft or vandalism.
Gap insurance could also help if your car is stolen and involved in an accident by covering any remaining balance owed on your loan that is more than what the insurance company is willing to pay from under your comprehensive and/or collision coverage.
There are many insurers offering gap insurance in Maryland. Gap insurance is often purchased from a car dealership when a new car is bought. If your car is being financed and you made little to no down payment, the leasing company will likely require that you have gap insurance.
Other instances in which gap insurance may be needed include:
Although not all insurance companies require gap insurance, it can offer financial security for most drivers. Gap insurance is typically paid up front, so you would not need to pay out of your own pocket to settle your loan on a totaled car.
Gap insurance covers loaned, leased or stolen cars totaled in an accident. Liability insurance, on the other hand, protects policyholders when they have caused an accident. Maryland drivers must carry the following minimum liability limits:
Liability insurance helps pay for bodily injury to another person or property damage caused by the at-fault driver. This coverage may also pay if the accident was caused by someone living in your household or a person who borrowed your car with permission.
Being involved in a car accident can be a stressful and overwhelming experience. Our car accident lawyers in Maryland are ready to review your particular circumstances in a no-cost consultation. You are under no obligation after this initial meeting to hire our firm. Should you decide to move forward, we collect no upfront fees until we help obtain compensation for you.
There are no upfront costs with our legal services. Contact us today at 410-907-3957.