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What is Gap Insurance?

When you purchase a new car, you want to be protected by insurance, so what is gap insurance and what does it protect? An optional insurance coverage, gap insurance is designed to cover the gap between the amount you owe on a car and the true cash value of the car at the time of an accident. Any discussion that involves car depreciation can be a tricky one, so we’ll break down the nitty gritty details of gap insurance for Omaha drivers below. As always, feel free to reach out to the Honda of Lincoln finance center with any questions!

What Does Gap Insurance Cover?

First, let’s establish what gap insurance doesn’t cover. Gap insurance is not meant to cover damage to your vehicle, property, or bodily injuries. Now that we’ve gotten that out of the way, gap insurance will trigger in the following instances:

  • Gap Insurance Covers:
    • Theft
    • Fire
    • Vandalism
    • Accident
    • Acts of nature (tornado, hurricane, flood, etc.)
  • Gap Insurance Does NOT Cover:
    • Deductible (though some gap insurance policies allow this)
    • Engine failures and other mechanical repairs/malfunctions
    • Death
    • Extended warranties

In short, gap insurance becomes active when an accident results in the total loss of your vehicle. Gap insurance is optional, but if you owe a lot on your loan, it is worth discussing with your insurance company.

Do I Need Gap Insurance?

It is highly recommended that you opt for gap insurance when purchasing a new car. Gap insurance is especially helpful if your dealership offers a plan that includes deductible coverage. Having this insurance will give you peace of mind, and help you save money, in the unfortunate event of an accident. As you discuss financing options, explore the pros and cons of gap insurance with our experts in the Honda of Lincoln finance center.

Explore All Insurance and Finance Options at Honda of Lincoln

We encourage Bellevue residents to enter into a car purchase with as much knowledge as possible. Whether that means researching the various certified pre-owned Honda models we have in stock, researching your insurance options, or reading up on the benefits to leasing vs. buying, we’re here to help! Feel free to reach out with any questions you encounter. Learn more about how you can protect your vehicle with our breakdown of the pros and cons of extended warranties.

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