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Q: Do I need gap insurance?

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I have Gap insurance. I bought my 2015 Kia Optima vehicle 9/15/14 on my birthday as a gift to myself. At that time it was told to me that it was necessary in case I ever got into an accident, my vehicle was totalled & I would receive full payment for my vehicle. Is that true & do I need to have Gap insurance? Please advise. Thanks!

A: Gap insurance is designed to cover the diff...

Gap insurance is designed to cover the difference between what is owed on the vehicle (your car loan) and what the insurance company may pay out in the event of an accident or loss. Any example might be a situation in which the balance owed on the car is $25,000, but the Kelly Blue Book value might only be $21,000 at the time of the accident or loss. This difference of $4,000 would be covered by your GAP insurance. Gap insurance is not necessarily required by law, however most banks or lending institutions will require it in order to fund the loan on the vehicle. As with any insurance, it is a smart choice to have gap insurance. If, for whatever reason, you feel you do not need this type of insurance, you can always cancel the policy.

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