If you are in the market for a new or used car and require financing to purchase the vehicle, you may need a special type of auto insurance in CT to protect your liability if your automobile is totaled in an accident. Many standard policies only cover the fair market value of an automobile, even if you owe more.
Owner’s Liability for the Unpaid Loan Balance
Vehicles can depreciate as soon as they are driven off the car lot. If you finance a car without a substantial down payment, you may owe more on your financed car than its fair market value. Therefore, if you have only made a few payments on your automobile and happen to be involved in an accident where it is considered a total loss, the insurance company may not pay the entire amount owed to the finance company or bank. If there is a difference in the amount you owe on the car and the amount the insurance company pays, you can be held liable for making the remaining payments on the car.
Guaranteed Auto Protection (GAP) is a type of auto insurance in CT that can cover the difference in what you owe on a car and what the insurance company deems as the fair market value. This type of coverage can be very valuable when purchasing new or used vehicles that are financed or leased. It can be purchased as an add-on to your existing insurance policy.