When they’re shopping for a premium vehicle like a 2018 Porsche 911, a lot of motorists ask us if gap insurance is worth the normally affordable premium you have to pay for this kind of insurance. Whether gap insurance is worth it depends on several factors.
Gap insurance is a type of car insurance that differs from your standard coverage. While your standard car insurance will pay up to the current market value of your car if it’s destroyed or stolen, gap insurance will pay the difference between what you owe on your automobile and its market value.
To determine if gap insurance is worth it to you, it’s important to understand how a gap may occur between the balance of your car loan and your automobile’s market value. While some classic cars are obvious exceptions, the value of most vehicles will depreciate every year. In many cases, automobiles depreciate much faster in the first year or two that they’re owned than they will when they’re older.
Some automobiles may lose as much as 20 – 30 percent of their value in the first year they’re owned. If you took out a car loan for $100,000 and your vehicle loses 30 percent of its value in the first year, your standard car insurance policy will only pay $70,000 if your vehicle is ruined or stolen after you’ve owned it for 12 months. If you owe more than that amount, you’ll have to pay the difference yourself. If you had gap insurance, your policy would pay the difference for you.
As Jacksonville, Florida Porsche dealers, we can tell you gap insurance is often worth it if any of the following applies to you:
- You put down less than 20 percent when you bought your car
- You rolled negative equity into your car loan
- You leased an automobile
- You financed over 60 months or more
- Your vehicle is expected to depreciate faster than average
To learn more about gap insurance, contact Porsche Jacksonville today.