Gap Insurance Rates in Alabama

Reader’s Question:

I just had my first car in my hometown in Birmingham Alabama AL which I acquired through a bank loan. I have comprehensive auto insurance coverage on it aside from the mandatory 25/50/25 liability coverage required by law. But my best friend said I still need gap insurance and I can’t understand why, since my car is barely a few weeks old.

Kathryn

Birmingham, AL

Congratulations on your brand new car, Kathryn.

Your best friend in Birmingham Alabama AL gave you one good piece of advice. She knows what really happens when there’s a claim on your comprehensive auto insurance coverage.

Okay, your car is a sleek and shiny baby now. You’re a safe and skillful driver and nothing should happen to you when you’re out on the road driving. But life is full of surprises. One day you leave your car in the parking lot, and when you return it isn’t there anymore. A car thief is now the new owner.

You file a claim on your auto insurance policy, and guess what. Your auto insurance company in Birmingham Alabama AL says you get paid, yes, but the amount you receive is something like 70% to 80% of the purchase price (the amount financed by the bank). At the end of the day you no longer have a car and still owe the bank 20% to 30% of the amount it financed. Ouch.

But if you have a gap auto insurance policy, it will cover the difference between your bank loan and the actual cash value assessed by your auto insurance company.