Navy Federal Gap Insurance: Protecting Your Investment

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When it comes to buying a new vehicle, one of the major concerns of car buyers is the risk of accidents or theft that may result in a total loss of investment. While car insurance policies can cover the damages incurred in such situations, they may not always provide the full value of the car. This is where gap insurance can come in handy. In this article, we will discuss what Navy Federal gap insurance is, how it works, and why it is important for car buyers.

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What is Navy Federal Gap Insurance?

Navy Federal Credit Union offers gap insurance to its members who finance their vehicles. This insurance policy is designed to cover the gap between the actual cash value of a car and the outstanding balance of a loan in the event of a total loss. This coverage is optional, but it can provide significant financial protection to car buyers who may otherwise face a significant financial loss.

How Does Navy Federal Gap Insurance Work?

Let’s say you buy a car for $30,000 and finance it for $25,000. A few months later, you get into an accident, and your car is declared a total loss. The insurance company determines that the actual cash value of your car at the time of the accident is $22,000. However, you still owe $23,000 on your car loan. Without gap insurance, you would be responsible for paying the $1,000 difference out of pocket. But with Navy Federal gap insurance, the policy would cover the $1,000 gap, allowing you to pay off your loan in full and start fresh with a new car.

Navy Federal gap insurance can also cover other costs associated with a total loss, such as your deductible, up to a certain limit. This means you won’t have to worry about paying these costs out of pocket either.

Why is Navy Federal Gap Insurance Important?

Gap insurance can be particularly important for car buyers who make a small down payment, finance a car for a long time, or buy a car that depreciates quickly. In these situations, the outstanding balance of the loan can easily exceed the actual cash value of the car, especially in the early years of ownership. Without gap insurance, car buyers may find themselves in a financial bind if the car is totaled.

Furthermore, gap insurance is often not included in standard car insurance policies. This means that even if you have car insurance, you may not be fully covered in the event of a total loss. By adding gap insurance to your policy, you can ensure that you are fully protected and won’t have to worry about additional financial burdens.

FAQs

What is the cost of Navy Federal Gap Insurance?
Answer: The cost of Navy Federal gap insurance varies depending on the value of the car, the term of the loan, and other factors. The cost is typically a one-time fee that can be added to the loan balance or paid upfront. Talk to a Navy Federal representative to get a personalized quote.
Is Navy Federal Gap Insurance required?
Answer: No, Navy Federal gap insurance is not required, but it is highly recommended for car buyers who finance their vehicles. In fact, some states may require gap insurance for leased vehicles.
When should I buy Navy Federal Gap Insurance?
Answer: You should buy Navy Federal gap insurance at the time of purchase or financing of your vehicle. This is because the coverage is only valid for the duration of the loan or lease.
Can I cancel Navy Federal Gap Insurance?
Answer: Yes, you can cancel Navy Federal gap insurance at any time. However, if you cancel the policy before the loan is paid off, you may be responsible for the remaining gap amount. It is important to talk to a Navy Federal representative before canceling your policy.
Can I transfer Navy Federal Gap Insurance to another car?
Answer: No, Navy Federal gap insurance is tied to the specific car and loan or lease. If you buy a new car or refinance your loan, you will need to purchase a new gap insurance policy.

Conclusion

Overall, Navy Federal gap insurance can provide significant financial protection to car buyers who finance their vehicles. By covering the gap between the actual cash value of a car and the outstanding balance of a loan in the event of a total loss, this insurance policy can help car buyers avoid significant financial loss. If you are considering purchasing a new car and financing it, talk to a Navy Federal representative about adding gap insurance to your policy.

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