If you have a loan on a vehicle, guaranteed asset protection (GAP) can help reduce the amount of money you have to pay out of pocket if you’re involved in a car accident. Mechanical breakdown protection can also help limit your out-of-pocket expenses by helping to pay certain covered repairs.
RCU Insurance Services can help you understand the potential benefits of these two products.
What Is GAP Protection?
If you have a loan or lease on your car and the balance is higher than your car’s value, GAP protection may help protect you financially. After an accident, if the costs of repairing your vehicle are high enough, your insurance company may decide that your car is a total loss.
If the cost of repairing your car plus its salvage value (after the crash) is greater than your car’s pre-crash value, it’s considered a total loss according to California laws. If the accident is covered by insurance, the vehicle owner receives a check for the car’s value. Unfortunately, the car’s value may be less than what you owe on your loan or lease.
Gap protection may also provide coverage if your car is stolen and is severely damaged or not recovered.
Gap protection helps bridge the “gap” between the amount you owe and the settlement from the insurance company. Without this coverage, you may be required to pay the difference on your own.
Who Needs Gap Protection?
Your lender may require guaranteed asset protection. If you have a lease, GAP coverage may be automatically included. Before purchasing GAP, make sure you don’t already have coverage.
You may not need guaranteed asset protection if you could easily cover a sizable gap between your insurance company’s settlement and the total amount due on your loan or lease. Many people choose this coverage because it helps provide financial protection after a severe accident.
What Is Mechanical Breakdown Insurance?
Mechanical breakdown insurance helps pay for certain necessary car repairs. Like other types of insurance, you may have to pay a deductible when you need to hire a mechanic to fix your car.
Each provider or insurer has rules about which repairs may be covered. This plan reimburses you for covered repairs due to the failure of a mechanical or electrical part minus your deductible.
Mechanical breakdown insurance won’t cover routine maintenance like oil changes or fluid flushes. It also won’t cover normal wear and tear items, like new tires.
When your car breaks down, you may have to pay to have it towed to a mechanic and rent a car while it’s in the shop. Mechanical breakdown insurance can also help cover those costs.
You can add mechanical breakdown insurance to a new or used vehicle.
Who Needs Mechanical Breakdown Insurance?
New cars come with warranties that cover the failure of major systems for a set amount of time or miles, whichever comes first. When that warranty expires, you have to pay for mechanical repairs on your own unless you purchase an extended warranty.
If covering a surprise car repair bill of $500 to $1,500 would cause financial problems, mechanical breakdown insurance may be for you.
According to the AutoTrader database, car repair costs in California are high compared to the rest of the country. California drivers paid an average of $400 last year, just to see why their check engine light was on. The fix can be as simple as a fuel cap (about $25), or as complex as a catalytic converter, which costs about $1,383 to repair.
Why Buy GAP Plus with Deductible Assistance?
GAP Plus with deductible assistance is available if you have an RV or auto loan with Redwood Credit Union. GAP Plus can help pay the difference between what you owe on your loan or lease and your insurance settlement if your car is stolen or is a total loss after an accident.
GAP Plus can also reduce your next Redwood Credit Union loan by $1,000.
If your car is damaged in a covered accident but isn’t totaled, deductible assistance can reduce your RCU loan balance by up to $1,000.
GAP Plus with deductible assistance protects a new or used vehicle with a value of up to $100,000. And it may cover qualified losses up to $50,000. This plan can also provide protection for up to six skipped payments depending on the circumstances.
Get the GAP and Mechanical Breakdown Coverage You Need
RCU Insurance Services is ready to help you understand how GAP and mechanical breakdown coverage can help provide critical financial protection. Contact us today to learn more about these coverages and to get a quote.
Learn more about GAP coverage.