Gap Insurance

[priusmaybe]

Well - I don't owe more than what the car is worth, as I had a good trade.


But, with rapid depreciation, and most folks putting little down, I am trying to understand it.


What does a 2007 Prius depreciate at Week 3, 2 months, 4 months, 6 months or 1 year?


If Insurance only pays what it is worth on the day of the wreck or disaster.....

[livelychick]

<div class='quotetop'>QUOTE(chuck_k @ May 3 2007, 07:57 PM) [snapback]435116[/snapback]</div>

guys, it's just gap insurance. Not GAP insurance. GAP doesn't stand for anything. Quite literally, it insures the gap between what you owe and what the car is worth.
[/b]

Au contraire, mon frere. GAP is an acronym that stands for "Guaranteed Auto Protection," at least if you buy it from Toyota Financial Services.

[JimN]

<div class='quotetop'>QUOTE(priusmaybe @ May 3 2007, 07:39 PM) [snapback]435133[/snapback]</div>

Well - I don't owe more than what the car is worth, as I had a good trade.
But, with rapid depreciation, and most folks putting little down, I am trying to understand it.
What does a 2007 Prius depreciate at Week 3, 2 months, 4 months, 6 months or 1 year?
If Insurance only pays what it is worth on the day of the wreck or disaster.....
[/b]

Historically the Prius has not rapidly depreciated. Any insurance company is going to want to pay the minimum amount for a claim. If the vehicle is at least marginally repairable I suspect you will need more damage on a car subject to gap coverage to get it declared a total loss.

For example, just to pull numbers out of the air. If the insurance company's policy is to total a car if the repair cost is 80% of the value then a $25000 car gets written off if the repairs cost $20000. If they have to pay a gap claim of $30000 on the same car it may take $24000 worth of repairs. Just my theory. Does anyone know how the system works?

[OleMissPrius]

Typically there is a 25% cap - meaning that the insurance company won't pay more than 25% more than the total value of the vehicle. An easy way to show this - your car is worth 10,000. You owe 15,000 - the insurance company will pay 12,500. - you are still better off than if you didn't have gap coverage but it won't necessarily pay off your entire loan. It's a much better bargain from your auto insurance company than from the dealer as most of you have found.

edited to add: I work for an auto insuance company (although I don't write estimates anymore) and my company doesn't take into consideration gap coverage when totalling a vehicle. Meaning it doesn't affect the value. A vehicle can be totalled in a couple of ways - there are things called constructive total losses - vehicles that are so severely damaged that you can look at it and know it can never be made right again (think vehicles torn in half, partially burned, trunk pushed into the rear seat), another way is if the estimate to repair is going to exceed the total value- including the costs of rental, repair time, expectations of supplements, etc.

Hope that helps...