What Is Auto Gap Insurance and What Does It Cover?

Colburn Law

Posted in Car Accidents on May 7, 2021

As a fault-based insurance state, Washington requires all drivers to carry minimum amounts of liability insurance. In addition to requiring coverage, you may also choose to purchase optional policies such as collision coverage or uninsured/underinsured motorist insurance (UM/UIM). Another form of optional insurance in Washington is gap insurance, which covers the gap between what you may owe for the vehicle and the cost of replacing it.

How Gap Coverage Works in Washington

Gap insurance provides compensation for the difference between an outstanding loan or lease balance and the vehicle’s actual cash value. The cash value is defined as the cost of replacing your car with a similar vehicle minus any depreciation. If you are in a car accident where your vehicle suffers irreparable damage, you can use gap coverage to pay for a replacement vehicle.

For example, say that you purchase a car with a $30,000 lease. A few years later, you are in a serious accident and total the vehicle. At this point in time, you still owe $15,000 on your lease and the actual cash value of the vehicle is $25,000. With gap coverage, you will receive $40,000—$15,000 to pay off the remaining balance, and $25,000 to pay for a new vehicle.

While gap coverage may pay for the difference between a loan or a lease and the cost of a new vehicle, there are certain costs it does not cover. You may not use gap insurance to pay for interest, late fees, or missed loan payments. If you added any extended warranties to your vehicle lease, you cannot use gap insurance to pay for them.

The Financial Impact of a Car Accident

If you do not have gap insurance, you may want to invest in this coverage. A car accident can lead to significant financial hardship; vehicle repairs and replacements can be very expensive. If you have injuries, you may need to pay for medical care, physical therapy, medications, and transportation to and from your appointments. While you are in recovery, you may be unable to work, leading to weeks of lost wages. Depending on the severity of your injuries, you may be unable to return to work at all.

On top of the financial impact of car accidents, you could suffer from physical pain, permanent disability, and emotional trauma. All of these factors can result in a reduced quality of life and significant hardship. Gap insurance may alleviate some of the financial burden. For the remaining costs, you may be eligible to file a claim against the other driver.

Filing a Car Accident Claim in Washington

In Washington, you can pursue compensation from an at-fault driver through a personal injury lawsuit or insurance claim. To prove your right to damages, you will need to provide enough evidence to establish the other driver’s liability and the losses you suffered, gathering documents such as medical records, pay stubs, and invoices. Surveillance footage, witness testimony, and expert witnesses may also help establish the other driver’s fault.

However, filing a car accident claim is not always an easy process. You may need to negotiate with insurance adjusters, navigate complex legal paperwork, adhere to strict filing deadlines, and conduct an in-depth investigation into the collision. These tasks can be difficult to complete after a recent collision, especially if you have serious injuries or lack a means of transportation.

In these situations, a Seattle car accident lawyer can help. An attorney will have the time, resources, and experience necessary to handle the entire claims process and craft a compelling case for your compensation. Contact an attorney as soon as possible after your accident to discuss your legal options.