Gap Coverage

We call it gap insurance. Maybe that’s misleading.

Questions received by show that there is a huge misconception about what gap insurance really covers. Many car owners believe gap insurance is a catch-all policy that makes their car payments anytime they’re unable to. That is not the case.

Gap insurance does not cover:

  • car payments in case of financial hardship, job loss, disability or death
  • repairs to your vehicle
  • the value of your car or balance of a loan if your car is repossessed
  • a rental car while your vehicle is in the shop
  • the diminished value of your car after an accident
  • a down payment for a new car
  • carry-over balances on any loans you rolled over into your new car loan
  • extended warranties you add to your car loan

In short, gap insurance isn’t “super coverage” that protects you if you don’t have the best auto insurance coverage or can’t pay on your loan.

What does gap insurance do? It pays the difference, in the event of a total loss, between what you owe on the car and what it is worth in an insurance company’s eyes. That’s it.

But that’s a bigger deal than you might think.

When you need gap insurance, and why

According to, the average new car depreciates 11 percent as soon as it leaves the dealer’s lot. After a year, it’s worth 20 percent less than new.

If you didn’t put much down and had your taxes and licensing fees rolled into your loan, you could be upside-down (owe more than car’s worth) before you are a block from the dealership.

For instance: You buy a car that stickers for $24,000 and rolls out the door with taxes and fees for $26,500. You put down only $1,000, sign your financing papers, get a car insurance policy and drive off the lot.

Nearly a year later, your “new car” is totaled out. You file a collision claim with your insurer and find out that the actual cash value of your vehicle is only $19,200. This means after your $500 deductible is taken out, your car insurance company will pay out $18,700 to your lienholder.

You still owe $23,500 on the car, so you’re left with a “gap” of $4,800.

With a gap insurance policy that includes coverage for your deductible, this whole amount would be covered. If you didn’t get gap insurance, you’re left paying the difference out of your own pocket for a car you no longer have – and that hurts, because you’ve got to buy another car, too.

Gap is actually an acronym, meaning “guaranteed auto protection” or “guaranteed asset protection.” Its function is to provide protection in the early years, when the loan exceeds the value of the car.

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Which 2014 model year cars have the highest and lowest insurance rates?

Jeep and Chrysler models have some of the lowest insurance rates of all new cars, according to a national survey of insurance data.

The survey from, which gathers data from six major insurance companies in all 50 states, estimated annual insurance rates for 2014 model-year cars.

Jeep and Chrysler models — both built by Fiat Chrysler — tallied half of the survey’s top 20 list of low-rate cars. The 2014 Jeep Wrangler Sport had the lowest rate of all new 2014 models at $1,080 per year, followed by the Jeep Patriot Sport in third ($1,104) and Jeep Compass Sport at No. 5 ($1,140). The Patriot Latitude and two more Wrangler trims (Sahara and Rubicon) rounded out the list, along with the Dodge Grand Caravan SE, Chrysler Town & Country Touring and Dodge Journey SE. No car on the top 20 list ranked higher than $1,209.

More domestic cars helped edge out the imports, including the GMC Acadia SLE-2, Chevrolet Traverse LS and Ford Escape S. But Honda claimed the Nos. 2 and 4 spots for the Odyssey LX and CR-V LX, and No. 7 went to the Subaru Outback 2.5i (see the full list below).

Which 2013 cars are the cheapest to insure?

Drivers in Washington, D.C., crash more than anyone, Allstate says

Georgia, California most expensive states to operate a car

The survey takes insurance data from 10 cities and towns from each state, and figures rates based on a 40-year-old man with a 12-mile commute. The sample policy includes a $500 deductible, $100,000 injury liability, $300,000 comprehensive injury liability and $50,000 property damage coverages.

Like in years’ past, expensive German cars are also the most expensive to insure. But the Nissan GT-R Track Edition took the No. 1 honor, at $3,169 per year. Close behind: High-horsepower cars from BMW, Mercedes-Benz, Audi, Porsche and Jaguar.

Among states, Michigan, West Virginia, Georgia, Washington, D.C. and Rhode Island had the highest average insurance rates in the country. (Given Michigan’s high auto theft rate in the Detroit area and the D.C. area’s high rates of reported car accidents, it’s no surprise. Plus, we can’t imagine how far insurance rates in Georgia will rise after all the crashes and vehicle damage from ice storms in the southern states, particularly in the Atlanta area.) Ohio, Maine, New Hampshire, Idaho and Iowa were the five states with the cheapest average rates, in that order.

Have a look at the full top 20 lists below.

Cheapest 2014 models to insure:

  1. Jeep Wrangler Sport – $1,080
  2. Honda Odyssey LX – $1,103
  3. Jeep Patriot Sport – $1,104
  4. Honda CR-V LX – $1,115
  5. Jeep Compass Sport – $1,140
  6. Chrysler Town & Country Touring – $1,140
  7. Subaru Outback 2.5i – $1,144
  8. Dodge Journey SE – $1,149
  9. Honda Odyssey EX – $1,149
  10. Dodge Grand Caravan SE – $1,158

Priciest 2014 models to insure:

  1. Nissan GT-R Track Edition – $3,169
  2. BMW M6 – $3,065
  3. Mercedes-Benz CL550 4Matic AWD – $3,019
  4. Mercedes-Benz SLS AMG GT – $2,986
  5. Porsche Panamera Turbo S – $2,970
  6. Audi R8 5.2 Spyder Quattro – $2,917
  7. Mercedes-Benz G63 AMG – $2,887
  8. Audi A8 L 6.3 Quattro – $2,869
  9. Jaguar XKR Supercharged – $2,854
  10. Jaguar XK – $2,610
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While you can’t change the weather, you can minimize some of winter’s biggest threats to your home.

While you can’t change the weather, you can minimize some of winter’s biggest threats to your home.

  Heavy snow accumulation can pose a threat to your home or business — both as it builds up and as it melts. The three most important things to do are:

  •   Watch for snow accumulation on the leeward (downwind) side of a higher-level roof, where blowing snow will collect. For safe removal that won’t endanger you or damage your roof, consult a roofing contractor for a referral.
  •   Remove snow from basement stairwells, window wells and all walls. Melting snow can lead to water damage and moisture intrusion.
  •   Keep your attic well ventilated to maintain a temperature close to that of the outdoors to minimize the risk of ice dams forming. A warm attic melts snow on the roof, causing water to run down and refreeze at the roof’s edge, where it’s much cooler. If ice builds up and blocks water from draining, water is forced under the roof covering and into your attic or down the inside walls of your house.

Water intrusion and flood damage from melting snow and ice can threaten homes and businesses, but you can take these steps to help minimize the potential damage.

Immediately after the threat of physical danger has passed:

  •   Make sure the building is structurally safe to enter or reoccupy.
  •   Turn off electrical power. Do not use electricity until it is safe to do so.
  •   Ensure that natural gas sources are safely secured.
  •   Secure the exterior to prevent further water intrusion. This can include boarding up broken windows, making temporary roof repairs, sealing cracks or tacking down plastic sheeting against open gaps in walls or roofs.

When it’s safe to begin cleanup:

  •   Disconnect all electronics/electrical equipment and move it to a safe, dry location.
  •   Remove as much standing water as possible from inside the building.
  •   Begin to remove water-damaged materials immediately.
  •   Ventilate the home as best you can with fans and/or dehumidifiers.
  •   Contact a water extraction company, if necessary, for assistance.

By taking immediate action, you will reduce the amount of damage and increase the chance of salvaging usable materials. You’ll also reduce the amount of rust, rot, mold and mildew that may develop, and lower the likelihood that the water will lead to structural problems.

Ice dams are an accumulation of ice at the lower edge of a sloped roof. When interior heat melts the snow, water can run down and refreeze at the roof’s edge, where it’s much cooler. If the ice builds up and blocks water from draining off the roof, water is forced under the roof covering and into your attic or down the inside walls of your house.

To help reduce the risk of ice dams:

  •   Make sure your gutters are clear of leaves and debris.
  •   Clean around outside drains
  •   Keep the attic well ventilated so snow doesn’t melt and refreeze on the roof’s edge.
  •   Make sure the attic floor is well insulated to minimize the amount of heat rising through the attic from within the house.

Bursting pipes occur when frozen water causes a pressure buildup between the ice blockage and the closed faucet. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to extreme cold. To keep water in your pipes from freezing:

  •   Fit exposed pipes with insulation sleeves or wrapping to slow heat transfer.
  •   Seal cracks and holes in outside walls and foundations near water pipes with caulking.
  •   Keep cabinet doors open to allow warm air to circulate around pipes.
  •   Keep a slow trickle of water flowing through faucets connected to pipes that run through an unheated or unprotected space.
  • Disconnect hoses from outside faucets and turn water off to hose connections from the inside.

Source: Institute for Business and Home Safety. IBHS is a national nonprofit initiative of the insurance industry to reduce deaths, injuries, property damage, economic losses and human suffering caused by natural disasters

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Tim Langhauser Switches to Kirby Insurance – Saves $1,200

“As soon as my brother got into the insurance game, I figured it was going to be my 2011-10-28 18.19.48obligation to give him a shot on quoting my auto and home insurance.  Up until this point I had always gone with Geico, Progressive or State Farm, mostly because they were the ones I saw on TV everyday.  Low and behold my rates were paying for all those fancy commercials!!!  Brendan switched me over to Encompass Insurance and saved me almost $1,200 a year between all of my plans!!!  Yea, I would say that was the last time I shopped my insurance myself.” – Tim Langhauser

Don’t get left in the dark chasing your tail trying to shop your own insurance, and end up supporting a computer animated gecko or a couple B List movie stars lining their pockets from insurance commercials!  Call me today 410-840-2922

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