How Gap Insurance Can Help After a Serious Car Wreck

A serious car wreck can leave you without a vehicle and still owing money on a car you can’t drive. The gap between what your insurance pays and what you still owe can leave you thousands of dollars in debt. Fortunately, GAP insurance exists specifically to protect you from this financial situation, ensuring that a serious accident does not saddle you with insurmountable financial strain on top of your physical and emotional recovery. Call a car accident attorney in St. George for assistance in dealing with this situation.

What Is GAP Insurance and What Does It Cover?

GAP insurance, or Guaranteed Asset Protection insurance, bridges the financial gap when your car’s actual cash value falls short of what you owe on your loan. When you drive a new vehicle off the lot, it immediately begins losing value, often dropping 20% or more in just the first year. Meanwhile, your loan balance decreases much more slowly, creating a dangerous gap where you owe more than the car is worth.

If your vehicle is totaled in an accident, your collision and comprehensive coverage will only pay up to the car’s current market value, not what you originally paid or what you still owe. GAP insurance steps in to cover this difference. For instance, if you owe $15,000 on your car loan but your insurance company values your totaled vehicle at only $11,000, GAP insurance covers that $4,000 difference.

It’s important to understand that GAP insurance specifically covers the loan balance difference. This coverage does not provide compensation for injuries, other property damage, or mechanical failures unrelated to accidents. You will need to leverage other sources of coverage to pay for these losses.

When Should I Invest in Utah GAP Insurance?

Certain situations create the perfect storm for a gap between your loan balance and your car’s value, making GAP insurance a wise investment that could save you thousands of dollars. You should seriously consider this coverage if:

• You made a down payment on the vehicle of less than 20%.
• You financed your vehicle for 60 months or longer
• You leased your car.
• You purchased a vehicle known for rapid depreciation.
• You rolled negative equity from a previous car loan into your new loan.

What Other Options Are Available for Compensation?

While GAP insurance protects you from loan deficiencies, this is far from the only consequence after a serious accident. However, you may also have other avenues for compensation, especially if another driver caused your crash. 

Utah operates under a no-fault insurance system, requiring all drivers to carry at least $3,000 in personal injury protection (PIP) coverage. Under this system, your own insurance typically covers your medical expenses and other losses regardless of who caused the accident.

However, you can step outside Utah’s no-fault system and pursue a claim against the at-fault driver if your case meets specific threshold requirements. You must either incur at least $3,000 in medical expenses or suffer serious injuries such as permanent disability, permanent impairment, permanent disfigurement, or dismemberment.

Explore Your Options for Compensation with an Attorney

If you were injured in a serious car wreck and need help restoring your financial position, don’t navigate this complex process alone. A seasoned personal injury attorney in St. George can help you understand your rights, evaluate all available compensation sources, and fight for the full compensation you deserve. Schedule a free legal consultation today to discuss your case and learn about your options for recovery.