Personally, I don't do Gap Insurance, but someone here will know...c'mon guys, lets help Enclavious! [/color] :beer: :angel:Enclavious said:Anyone come along a better quote than $299? That seems to be the standard price I am finding.
OK. I've never had Gap on my purchases, only leases, as you did. But I guess the concept is same! I usually put $3-5K down on a purchase. (last purchase in '03, for $40K) But that's nothing compared to drop in value on $40K autos! Guess it's a good deal. Very interesting subject. This is new to me.Enclavious said:No, it's a purchase. The gap insurance covers the difference in the loan versus what the vehicle is worth at time of loss. The residual drops quickly on new cars but your loan amount doesn't change. I paid the $299 and will receive full loan payoff if totaled. I've had gap insurance on all my leased vehicles but those are within the payment.
Best thing to do would be to consult with your insurance agent regarding the need for GAP insurance in relation to your own personal policy [/color] - only way you can be fully informed. The guy in that "room" when you sign your final papers knows he has you - unless you are prepared, so be prepared! Salesmen's jobs are to sell, don't get sold...........KNOWLEDGE IS POWER! :thumb:Enclavious said:No, it's a purchase. The gap insurance covers the difference in the loan versus what the vehicle is worth at time of loss. The residual drops quickly on new cars but your loan amount doesn't change. I paid the $299 and will receive full loan payoff if totaled. I've had gap insurance on all my leased vehicles but those are within the payment.
Enclavious, as I see it, you need it even if you pay CASH! If you total it (or some Import driver does it for you :angryfire and the Ins. co says: "the book value is only $29K and you paid $40K 5 mos ago"...........you're out the money, or at least chasing the guy who hit you.........IF he even has Ins!! (don't get me started !! :angryfireEnclavious said:Rosita, if you pay cash you wouldn't need it. Also, if you are putting down a large down payment of trading in you most likely won't need it either. If your scenerio is like mine; no down payment and financed through a credit union (or bank) then it makes financial sense. Basically if I total my vehicle and they say the price is $38K and I took out a loan of $42 I am stuck paying on the remaining 4K without the use of the vehicle. This holds true if the accident is someone elses fault too. I purchased my policy through my Nationwide insurance agent but I did a lot of price quotes and the best I found was $299 which covers the MSRP + 20% of the vehicle price (not what you bartered it down to).
This is my view, and that of my insurance agent (sorry, SRX). The purpose of gap insurance is to prevent you from going "upside down" on an auto loan, not to insure against depreciation. If you total your new Enclave driving it off the lot, "replacement value" means just that; you have to go back inside and buy another one. At the moment, there are no "used" Enclaves selling at depreciated amounts! If you do it next year, you might have to buy a used 2008 equivalent to the used Enclave you lost. As a cash buyer, that's a wash. But if you have to first pay off an MSRP+interest loan .....Enclavious said:Rosita, if you pay cash you wouldn't need it. Also, if you are putting down a large down payment of trading in you most likely won't need it either.
I hadn't even thought about if my car gets totalled by someone else. Ouch.. I need gap insurance (so I can sleep at night..). Thanks for the tip. So its about $300 per year?Smokin SRX said:Enclavious, as I see it, you need it even if you pay CASH! If you total it (or some Import driver does it for you :angryfire and the Ins. co says: "the book value is only $29K and you paid $40K 5 mos ago"...........you're out the money, or at least chasing the guy who hit you.........IF he even has Ins!! (don't get me started !! :angryfire
25% depreciation in five months? If I thought that was likely, I wouldn't be here!Smokin SRX said:Enclavious... "the book value is only $29K and you paid $40K 5 mos ago"
The 25% I allude to is between what we pay to buy, and WHOLESALE book used by Ins. Co. to protect themselves. Otherwise everyone w/ a blown tranny would burn their car, if they got market value cash back.PrairieWind said:25% depreciation in five months? If I thought that was likely, I wouldn't be here!
If indeed that happens, Enclavious would be entitled to a five-month old, similarly equipped, Enclave. NP to the cash buyer. (Well, not really, but not an $11K problem).
PrairieWind, this is exactly what I always believed Gap insurance was. You cannot insure a vehicle for the purchase price, only what it was worth when it was wrecked. I have a friend who believes if her 04Explorer was totaled in an accident she would get a brand new Explorer. I don't think so. She will only get what is costs to replace an 04Explorer. I thought maybe I was misunderstanding what Gap insurance really was, but your post makes in pretty clear. Do we have any insurance people here?PrairieWind said:No insurance company is going to insure anyone for depreciation and normal wear and tear on anything. Think of the fraud opportunity! (I want to trade in my September Enclave for a March one with a better color, so I .... >)
Gap insurance does not hedge against the risk of depreciation. It hedges the risk of taking out a loan with insufficient equity. (Thats the risk the "upside down" home loans have revealed). Thats why a lender like GMAC might well build gap insurance into the loan. It protects THEM as much as you.
Agreed, no car is insured for its MSRP or even the price you actually paid; it is insured for its "replacement cost", a.k.a. "market value" at the time of its destruction. I don't think an insurance company can get away with a low-ball "wholesale" cash settlement for a new car; they would have to present you with an equivalent car you could purchase for that amount. I assume you carry real insurance and have a real lawyer if you need one.
As your car ages and goes out of warranty, you should start reducing your collision and comprehensive coverage to track declining replacement value. A mechanical failure out of (extended) warranty is normal wear and tear, and you chose to bear that risk yourself.
Enclavious, my absolutist stance is for the cash buyer, like our young friend RT. I just reread your original posts, and see that you are taking out a loan and don't ask whether to get gap insurance, but how much to pay for it. Your reply to Rosita2001 is sound, and this discussion has drifted OT as far as you are concerned. Theoretically, the premium might vary with the cost and your equity; in fact it may be fixed by the lender. SRX: your agent (and I) say "grab it", unless you put a chunk of money down - as you said yourself!
That's enough from me. I'll be quiet and hope that a professional insurance agent or risk manager will speak up.