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Does gap insurance pay for negative equity?
I owe more on my car than it's worth currently. It was just totaled and I have gap insurance. Am I covered? I can't afford to carry the negative equity with me in a new loan.
Emily Maracle · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Sorry to hear about your accident, but you do have some good news!
Gap insurance
will eliminate the negative equity on your car loanNegative equity refers to a situation where you owe more on your loan than what the vehicle is worth. If this happens when your car is totaled, gap insurance would cover the difference and pay off your negative equity. Essentially, it bails you out of an
upside down car loan
, although you will have to consider where to purchase a new car.Without gap insurance, you’d have to either pay off the difference yourself or roll it into a new car loan.
Because your car was totaled in the accident, you may be shopping around for a new vehicle. Don’t forget to save money by shopping around for car insurance. Use the
Jerry
app to compare rates and find the best coverage and price for your needs.”View full answer
- Gregory R.
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