GREENSBORO, NC:: You just bought that car you’ve had your eye on for several months. The one seating in the front row of the dealership that you pass by every day. It’s a bright red convertible with leather seats and a sunroof.
Then, only a month after you bought it, as you’re driving it you get in a wreck and the car you love so much is totaled. Fortunately, you have insurance so at least you won’t be out the $10,000 you paid for it.
A couple weeks pass, and your insurance agent tells you they are making a settlement offer of $8,000. The reality is this happens to thousands and thousands of people every year. They lease a car and are offered a lot less after a crash than they still owe on the car.
To protect consumers in this situation is an insurance option called Gap insurance. Offered only when you lease a car the insurance will cover the difference between what you were offered and the amount you still owe on the car, “If I were you I would make sure I got gap insurance when I got a loan on my car,” said Michelle Osborne with the North Carolina Department of Insurance.
If you decide to pay cash for your car you can purchase replacement cost insurance that provides the same protections as gap insurance.
The other option if you don’t want to pay for gap insurance or replacement cost insurance is to ask for a waiver, however, you must finance the car, “In the event of an accident that waiver will say you don’t have to pay the difference between the value of the car and the loan value,” said Osborne.
So, before you go out and buy another car, or before you get into a wreck with the one you have now, you can ask your insurance agent what your options are.