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How Does Gap Insurance Work in Florida?

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If you are a Florida driver, it is important to understand guaranteed asset protection (GAP) insurance. Gap insurance is an optional form of auto insurance in Florida, although in most cases, it may be required by your lender if you take out an auto loan.

How Gap Insurance Works: The Basics

Gap insurance covers the difference between the value of your car and the amount you still owe on your loan. If your vehicle is totaled in an accident, gap insurance will pay the difference between what your insurance company pays and what you still owe on your loan.

For example, you buy a car for $20,000 and get in a wreck where your car is totaled. If you still owe $15,000 and have collision coverage, it would pay your lender up to the totaled car’s depreciated value.

If the car had an actual cash value, after depreciation, of $13,000 at the time of the crash, you would have to pay $2,000 in cash to clear your loan. With gap insurance coverage, your insurer would help pay that $2,000.

Do I Need Gap Insurance?

Gap insurance is not required in Florida, but some leasing companies may require you to purchase it. Additionally, some dealerships may automatically add gap insurance to your loan; however, you can decline this coverage.

How Much Does Gap Insurance Cost in Florida?

The cost of gap insurance varies depending on the value of your car, the length of your loan, and whether you get it through the dealership or an auto insurance provider.

How Do I Get Gap Insurance?

You can purchase gap insurance from most auto insurance companies. If you are financing your car, your lender may offer gap insurance.

It is important to remember that to qualify for gap insurance; your auto insurer may require you to carry comprehensive or collision coverage on your policy.

When Should I Buy Gap Insurance?

It is recommended that you purchase gap insurance when you buy your car or take out a loan. This way, you will be covered from the start in case of an accident.

Is Gap Insurance Worth Buying?

When there’s a substantial difference between your car’s actual cash value and what you owe on it, gap insurance is valuable protection. You should consider purchasing gap insurance if:

  • You made a lower down payment on a new car: If you put down less than 20% on your car, you could end up with negative equity on the vehicle as soon as you leave the lot.
  • You have a longer finance term: The longer your vehicle is financed, the better the chance of owing more on the car than it’s worth.
  • You’re leasing your car: Most lenders require gap coverage on leased vehicles.
  • You have a loan rollover: If you owe more on the loan than your car is worth at renewal, gap insurance can help protect you against the negative equity.

Does Gap Insurance Cover My Comprehensive/Collision Deductible?

Generally, gap insurance will not reimburse you for your collision or comprehensive deductible in most situations. However, it is important to check your policy to be sure.

What Happens if I Don’t Have Gap Insurance?

If you don’t have gap insurance and your car is totaled in an accident, you may be responsible for your remaining loan balance. This could leave you thousands of dollars in debt and without a car.

How Long Does Gap Insurance Last?

Gap insurance applies for the duration of your policy. However, you likely won’t need it for the entire length of your loan. You can drop the insurance once you owe less than what the car is worth.

Does Gap Insurance in Florida Follow the Car or the Driver?

Gap insurance in Florida follows the car, not the driver. This means that if you sell your vehicle, your gap insurance policy will no longer be valid.

Transferring Your Gap Insurance

You can transfer your gap insurance policy to the new buyer if you still owe money on your car loan when you sell it. However, the new buyer must meet all of the requirements for gap insurance.

These requirements typically include having a loan on the car and carrying comprehensive and collision coverage. Be sure to check with your insurance company to see if they offer this option.

If you don’t plan to transfer your gap insurance policy but no longer wish to have coverage, you can cancel your policy anytime by contacting your auto insurance company or dealership.

Gap Coverage vs. Other Coverages

Other types of coverage you should consider in addition to gap insurance include:

Florida Auto Insurance Requirements

Florida requires all drivers to carry:

  • Personal Injury Protection Insurance (PIP): Drivers must carry at least $10,000 of PIP coverage. It covers 80% of your medical bills and 60% of lost wages if you are hurt in an accident. It will also cover up to $5,000 in death benefits regardless of who was at fault for the crash. 
  • Property Damage Liability (PDL): Drivers must also carry at least $10,000 in PDL coverage. This coverage protects you from out-of-pocket costs if you damage someone else’s property in an accident. It may include damage to another vehicle, fence, tree, mailbox, road sign, or building.

Bodily Injury Liability Insurance

In Florida, drivers aren’t required to carry bodily injury liability (BIL) insurance. However, it protects you if you have a car accident in which people are injured or killed due to your negligence. Despite the state’s no-fault system, you could still be sued for injuries your PIP insurance fails to cover.

Uninsured/Underinsured Motorist Coverage

Uninsured motorist protection is another type of auto insurance that is important to consider if you are a Florida driver. Because the state doesn’t require drivers to carry BIL, this is the best option for protecting yourself in an accident.

With this coverage, you are paid for injuries caused by an auto accident where the at-fault driver is uninsured (has no insurance) or underinsured (not enough insurance). While this coverage does not pay for your car, it may cover medical bills, lost wages, and estimated costs of future medical care.  long-term nursing care. 

Comprehensive and Collision Coverage

Insurance providers usually require drivers to carry collision and comprehensive coverage on their existing auto insurance policy before buying gap insurance. These policies provide more coverage for you and your vehicle but are not required in Florida.

Collision insurance is based on the age and value of your car. If a collision with another vehicle or object led to your accident, it covers damage to your automobile. Even if you were at fault for the accident, you could make a collision claim on your own policy. 

Comprehensive car insurance helps cover damages to your vehicle that a collision did not cause, whether or not a crash occurred. Coverage includes vandalism, auto theft, windshield repairs, fire, animals, and “acts of nature” in Florida, such as hail storms, lightning, floods, and hurricane damage.

When you file a claim on collision or comprehensive coverage it is reduced by your deductible amount. Common deductibles are $250, $500, $1,000 and higher. If you get into an accident and your vehicle suffers $2,000 worth of damage and your deductible is $250, the insurance company would pay $1,750 of the claim. 

New Car Replacement Coverage

New car replacement coverage helps you purchase a brand new vehicle of the same make and model or, in some cases, pay more than the value of the original vehicle if a newer model is available.

Most gap insurance companies offer both gap insurance and new car replacement coverage. However, some companies only allow you to purchase one or the other.

Contact a Car Accident Attorney Today

After being in a car accident, one of the first things you should do is call a car accident lawyer. With their guidance, you will better understand your rights and remedies.

The Fran Haasch Law Group and our personal injury attorneys are standing by to help car accident victims in Clearwater, Florida, and the Greater Tampa Bay region. We offer free case evaluations to inquiring clients. Our case results speak for themselves, but if you would like to know more about our legal services, please feel free to call (727) 784-8191 or contact us online to get started on receiving maximum compensation for your personal injury case.

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Want to learn more about car accidents? Whether its how to prevent them or what to do once you’ve been in one, our blog can help you gather the knowledge and information you need.