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Purchasing a new car is exciting—car depreciation, however, is not. For most of us, that new car we drive off the lot can lose up to 20% of its initial value during the first year of ownership. But what happens when disaster strikes and your new car is stolen or totaled? Collision and comprehensive insurance will payout your car’s actual cash value (ACV), or the amount it was worth immediately before the accident. But if you owe more on your auto loan than the vehicle’s worth, you’ll need to pay the difference out of pocket. That’s where gap insurance comes in.
What is Gap Insurance and How Does it Work?

Gap insurance is an optional coverage meant to fill in the “gap” between your car’s actual cash value and what you still owe on a leased or financed vehicle after its been stolen or totaled. Also referred to as loan/lease coverage, gap insurance protects you financially from car depreciation, especially if you made a small or no down payment.
To purchase gap insurance, you’ll first need comprehensive and collision insurance, which cover your vehicle. You cannot purchase gap insurance if you only have your state’s minimum auto insurance requirements because it is usually liability-only insurance, which does not cover your property. Some lenders may require you to carry gap insurance as a condition of your loan or lease.
So, how does gap insurance work? Consider the following example: let’s say you financed a new car that is now worth $20,000 due to depreciation, but you have a remaining balance of $25,000 on your car loan, which is a $5,000 gap. If the vehicle is totaled in a covered car accident, your insurer will payout $20,000 (minus your plan’s deductible). With gap insurance, your insurer will also cover the remaining $5,000 left on your car loan. Without gap insurance, you’d be responsible for paying the $5,000 out of pocket.
When Should I Purchase Gap Insurance?

Purchasing gap insurance may be worth it if:
- You put less than 20% down towards your financed purchase. Cars depreciate quickly, so putting a small or no down payment makes it easier for your loan to turn upside down.
- Your auto loan term is longer than five years. Longer car loan terms may lower your payment but ultimately cost you more over time in added interest. So you may be paying off a larger loan more slowly than the car is depreciating.
- Your leased/financed car is less than three years old. Newer cars depreciate faster than older cars.
- Your annual mileage exceeds 12,000 miles. Cars with higher mileage are often worth less than those with low mileage. Gap coverage will protect you from increased depreciation.
On the other hand, gap insurance may not be necessary if:
- You purchased a used vehicle over three years old. Cars depreciate more during the first few years, so some insurers may not offer gap coverage for older models.
- Your loan is for three years or less. If you make a sizeable down payment and have a short-term loan, it’s less likely that your loan will turn upside down.
- You can afford the difference between the amount owed and the car’s value. If you can afford to cover the gap if your vehicle is stolen or totaled, gap insurance may not be worth it.
What is an Upside Down Loan?
A car loan is “upside down” when your remaining balance exceeds your vehicle’s worth. While being upside down isn’t necessarily a problem if you can continue to make payments and keep your car until the loan is paid off, it can become an issue if your car is totaled, stolen, or must be replaced quickly. Loans typically become upside down due to a lack of an initial down payment or when you opt for a longer term.
Should I Purchase Gap Insurance from the Dealership?

You’ll typically have the option of purchasing gap insurance directly from the dealer when financing a new car. However, it isn’t recommended that you do so. For one, gap insurance purchased through a dealer may be included in your loan payments, making them subject to additional interest. Additionally, purchasing gap coverage through a standard insurer is often significantly cheaper.
How Much Does Gap Coverage Cost?
As mentioned, gap coverage purchased with an insurer is typically cheaper than with a dealership. It is possible to purchase a stand-alone gap insurance policy. However, you’ll get a better deal by adding it to your current policy with comprehensive and collision coverage. Overall costs can vary depending on your vehicle, but according to the Insurance Information Institute, adding gap insurance with your collision and comprehensive coverage generally only adds about $20-$50 to your annual premium.
Looking to Compare Quotes? AIS Can Help
With so many different coverage types, navigating the insurance marketplace can sometimes feel tricky. However, it doesn’t have to be. At AIS, we have a team of insurance specialists who can assist you in your search for reliable car insurance. For over 55 years, we’ve helped our customers find and compare quotes from our network of insurance providers. To learn more about gap insurance or any other forms of coverage, give us a call today at (888) 772-4247, or start a free quote online.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
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Does My Commercial Property Insurance Cover Natural Disasters?
Business owners may not have control over when a natural disaster strikes, but they can take proactive steps to protect their company from the devastating aftermath. One crucial action is obtaining insurance, which can act as a financial shield against unpredictable forces of nature. Among the various insurance coverage options, commercial property insurance stands out as the most essential policy for business owners to consider. Let’s explore how commercial property insurance protects your business from the different natural disasters your company may face.
Importance of Commercial Property Insurance in the Face of Natural Disasters
Every year, catastrophic events cause significant damage resulting in millions of dollars in repair and rebuilding expenses. The Federal Emergency Management Agency (FEMA) reveals that 25% of companies fail to reopen after a natural disaster strikes. Without adequate insurance coverage, businesses may face challenges in recovery, risking closures and financial strain. That is why commercial property insurance serves as a safety net, allowing businesses to rebuild and resume operations swiftly after a natural disaster.
How Commercial Property Insurance Works Amongst Different Types of Natural Disasters
Whether it’s hurricanes, earthquakes, or wildfires, commercial property insurance can help protect your businesses’ physical assets and aid in recovery efforts. Let’s explore how this coverage operates for each specific event.
1. Hurricanes

Commercial property insurance offers comprehensive coverage for, many losses, such as damage from high winds and heavy rainfall. This coverage extends to roof damage, broken windows, and exterior destruction. However, it’s essential to note that commercial property insurance does not cover losses caused by rising water or floods. Your standard commercial property insurance won’t provide coverage even if a hurricane leads to flooding. Therefore, owners must consider obtaining separate flood insurance to safeguard their business if the business is located in a flood-prone area.
2. Flood
Floods are one of the most common natural disasters that can cause extensive damage and business owners frequently underestimate the risk of floods. As emphasized earlier, obtaining flood coverage requires a separate policy. This specialized insurance policy helps covers damage to your building’s structure, contents, and equipment caused by rising water. If you have difficulty finding flood insurance from a private insurer, you can obtain a quote from the National Flood Insurance Program (NFIP).
3. Tornadoes

More than one thousand tornadoes hit the United States every year. Similar to a hurricane event, commercial property insurance covers wind and storm damage. Be sure to review your policy’s specific terms and coverage limits to ensure adequate protection against tornado risks. It’s also important to note that commercial property insurance does not extend coverage to your business’s vehicles. A separate commercial auto insurance policy must be purchased to protect cars and other vehicles.
4. Volcanoes
While volcano eruptions are rare, commercial property insurance generally covers damages from volcanic explosions, ash, dust, or lava. However, similar to flood zones, insurers typically do not offer coverage for lava flow. If an eruption triggers earthquakes or mudslides, those damages won’t be covered, but owners can obtain separate earthquake insurance.
5. Earthquakes

Many commercial property insurance policies exclude coverage for earthquake damage unless an endorsement or rider is added. Nonetheless, even when included, the coverage tends to be limited and restrictive. Therefore, it is highly recommended for businesses that operate in earthquake-prone areas obtain a separate and dedicated earthquake insurance policy. Such a policy can provide comprehensive protection against various earth movement damages such as collapsed gas lines, crumbling or cracking walls, and damage to the interior and exterior of buildings.
6. Wildfires
Damages caused by wildfire or lightning are covered under commercial property insurance. It covers physical structures, such as buildings, equipment, and inventory, that may be damaged or destroyed during a wildfire. Additionally, it often includes coverage for business interruption, compensation for lost income, and ongoing expenses if your business is forced to close or relocate due to the wildfire. With this insurance in place, you can reduce the financial impact of wildfire-related losses and focus on swiftly rebuilding and continuing operations.
Ensure Your Business By Insuring It
Having the right commercial insurance coverage can make the difference between getting back in business in a few days versus months or possibly never. Unfortunately, many small businesses only discover they aren’t adequately insured after experiencing a loss. Don’t let that happen to you. Take action now to protect your business by speaking with one of our Commercial Insurance Specialists today at (855) 919-4247. Our specialists can provide you with a quick commercial property insurance quote and ensure you have the necessary coverage to safeguard your business.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may differ from those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
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What’s More Important When Purchasing a Used Car: Model Year or Mileage?
With inventory shortages and ongoing price changes, the used car market isn’t what it used to be. According to Cox Automotive, the average listing price for a used car was $26,202 at the end of March. Although significantly lower than the cost of a new vehicle—$48,008 on average—used car prices are still higher today than before 2020.
If you’re in the market for a used car, you may wonder what to consider before deciding on a vehicle. Besides your personal needs, much of your decision will typically boil down to two key factors: a car’s age and mileage. But is one more important than the other?
Understanding A Used Car’s Mileage and Its Importance

A used car’s mileage is often one of the most significant factors that determine its price. When searching for a used vehicle, you’ll inevitably come across similar models with different odometer readings. But what is considered high mileage?
Generally, a vehicle is considered to have high mileage once it surpasses 100,000 miles. Many consumers believe they should avoid cars with excessive mileage due to potential mechanical issues. Although it is something to weigh, modern advancements in car manufacturing have enabled cars produced in the last 20 years to last well after the 100,000-mile mark with proper maintenance and care.
How a car was used to reach the 100,000-mile mark is equally important. Over time, shorter trips in the city can cause a lot more wear and tear to a vehicle compared to longer highway commutes. That’s because car engines are put under greater stress if they’re constantly being turned off and on versus only starting twice a day. With this in mind, a well-maintained commuter car with 100,000 miles may be better than a lower-mileage car used in the city without proper maintenance history.
Mileage is important when considering a used car. Still, it alone does not give you a complete picture to base your decision on.
Understanding a Used Car’s Age and Its Importance

Another scenario you may encounter when searching for a used car is an older vehicle with low miles. If 100,00 miles is considered high mileage, what is considered low? According to the Federal Highway Administration, drivers add around 13,000 miles to their vehicles annually. So, if a vehicle is 10 years old with only 70,000 miles, it is considered a low-mileage vehicle.
However, as with a high mileage vehicle, it’s important to get as much information on the vehicle’s history when considering an older model. For example, how often was the oil changed? Has it had any major repairs? Was it used frequently or not? Asking these questions will help you understand how a vehicle was used and how it will perform as it ages. This is especially true for older cars with a low mileage reading. In these situations, you must review the maintenance history to ensure the vehicle wasn’t involved in a major accident or hasn’t sat unused for too long.
Remember that older vehicles are less likely to have advanced safety features, such as forward collision warnings and backup cameras. If these features are important to you, a newer vehicle with higher mileage may be a better option. Additionally, it’s more likely that an older vehicle will no longer have its manufacturer’s warranty or pre-owned certification available.
So, Does Mileage or Age Matter More When Buying a Used Car?

As we’ve discussed, there is no hard-set answer to the question, “does car mileage or age matter more when purchasing a used car?” Although both are essential factors, a vehicle’s service and maintenance history should hold more weight. For example, a 6-year-old car with 30,000 miles may seem like a great deal until you learn that the previous owner never performed any routine maintenance or care. Still, with vehicle improvements and added safety features, choosing a newer car may be the better option.
If you’re torn between a high mileage or an older car, consider how you will use the vehicle before purchasing. An older car with low miles may be a better option if you plan to add a significant amount of miles onto it.
To fully understand a vehicle’s condition, we recommend having it inspected by a certified mechanic before finalizing the purchase. Although a new paint coat and clean interior can make a car look brand new, there may be mechanical defects not visible to the untrained eye. After the car inspection, you’ll better understand the car’s overall condition and what may need replacing or repairing down the line. An inspection may cost around $100 to $300, but purchasing a car without performing one first can cost you even more.
Insuring a Used Car
The process for insuring a used car is the same as insuring a new car. Depending on where you live, you’ll be required to purchase your state’s minimum car insurance coverage and likely recommended to purchase additional coverage, like collision and comprehensive. Your insurance premium price will ultimately depend on several factors, such as your driving history, location, and the type of car you are buying. If you have a general idea of the car you’ll purchase, getting a car insurance quote before finalizing your search will help you estimate your overall costs.
At AIS, we make it easy to compare auto insurance quotes from our network of trusted insurance providers. With over 55 years of experience, our insurance specialists know the right questions to ask to find the best coverage options for you. If you have any questions or want to learn more about our insurance partners, call us today at (888) 772-4247.
The information in this article is obtained from various sources and is offered for educational purposes. Furthermore, it should not replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. No warranty or appropriateness for a specific purpose is expressed or implied.
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