When you become involved in a serious accident, the auto insurance company responsible for paying for repair or replacement may decide that your car is not worth repairing. If the damage is too extensive, the insurer can declare the car a total loss and pay you for the vehicle instead of making repairs.
This can create surprisingly complicated situations, though, as your car may be worth less money than you owe on the vehicle.
That’s where Florida gap insurance comes in. Florida gap insurance provides vital protection after a serious car wreck, but you need to understand how it works.
Diaco Law can help you learn more about gap insurance and other types of insurance protections in place when you’ve been in a crash. To find out more about how our Tampa car accident attorneys can help you, give us a call at (813) 945-6110 or contact us online today.
What is Florida Gap Insurance?
Gap insurance is a type of insurance coverage that protects you if your car is worth less than you owe on it when the vehicle is stolen or totaled after an accident.
Insurance companies only pay you the vehicle’s fair market value if your car is destroyed beyond repair in a serious Florida car accident. You may owe more than the fair market value, though, and gap insurance pays off the remaining loan balance above the amount your insurer won’t cover.
It’s easiest to understand Florida gap insurance with an example.
Let’s say you bought a car with a low down payment and a long car loan, and you aren’t paying down the loan balance very quickly, even though the car is depreciating or going down in value regularly. The car’s fair market value may be $20,000, but you may owe more, such as $25,000 or some other higher amount.
If your car is totaled, the insurer will only pay the $20,000 it is worth. If you don’t have gap insurance, you still must pay your lender the other $5,000. That money must come out of your pocket. If you do have gap insurance, though, the insurance will pay the remaining $5,000.
Do You Need Florida Gap Insurance?
Many car buyers today are underwater or have negative equity in their vehicles. There are many reasons for that, including the fact that cars depreciate or decline in value quickly, and the fact that cars have gotten so expensive that many people finance them over a long time.
Since you have a substantial chance of being underwater on a car loan, you should have gap insurance if there is any risk of that occurring. You should have this coverage if you don’t want to spend thousands paying back a loan on a car you no longer can drive.
If you have a loan on your vehicle or you are leasing your car, you may also be required by your lender or loan provider to get gap insurance coverage in place. This is to protect both your interests and the lender’s interests by ensuring balances can be paid in the aftermath of a serious accident.
Get Help from a Florida Car Accident Lawyer After a Serious Crash
A Florida car accident lawyer at Diaco Law can provide invaluable assistance in getting full and fair compensation after an accident. This includes identifying all sources of insurance coverage and working with you to make claims with insurers and fight for the compensation you deserve. Give us a call today or contact us online for a free consultation and to learn more about how we can help you.