Will Gap Insurance Help Me Pay Off My Car Loan if I Lose My Job?

In this day and age, people worry about their bills being paid. This becomes particularly worrisome if you become unemployed. In fact, the nationwide unemployment rate, as of 2009, is 9.5% according to Bureau of Labor Statistics.
It's important to know what your auto insurance will and won't cover if you should suffer from unemployment. There is the common misconception that if you have gap insurance that it will go into effect and pay your car payments while you are out of work – this is unfortunately untrue.

For your gap insurance to go into effect, it requires that the Actual Cash Value (ACV) of the car is paid out. This is usually paid out by your insurance company if the car is stolen or if the car is damaged beyond repair. The loss of a job does not qualify because the insurance company won't make your car payments if you become unable to due to unemployment. This is an important distinction to understand, because many people turn to gap insurance in this unfortunate scenario and are disappointed when it doesn't help to pick up their car payments.

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Look for auto insurance options if you lose your job

While gap insurance pays out the difference between the ACV and the remaining balance on the lease or loan, there are options out there that can help during unemployment. If you take on something like Payment Protection, you will incur an extra cost per month but it can help to make your car payments if you become unemployed.

It's important to understand that this is the best route to go if you are worried about making car payments or concerned about unemployment in general. gap insurance is meant to go into effect after the ACV has been paid off, so counting on it in times of unemployment can be a dangerous mistake. Knowing this in advance and getting the plan that works for you can give you peace of mind later on.

Find out which car insurance plan is right for you. Request more information here!