Trying to understand your Astoria, OR home loan amounts and insurance policy amounts can be difficult, and trying to determine the difference between what your auto loan amounts and insured amounts are can be tricky, too. At Linda Dugan Insurance, we know that you need to understand the difference in order to obtain the right protection. Here’s what you need to know.
Loan Amount VS Insured Amount
“Loan amount" is the amount of money you borrow from the lender and agree to repay. This amount sometimes includes more than just the amount of money you borrow – it can also include closing costs, fees, and points. The amount of your loan can differ significantly from the amount of your insurance coverage, which is the amount of policy coverage.
Why The Difference?
When you compare your loan amount with your insured amount, you need to consider the amount of money paid versus the money you’ll receive in the event of a claim. For example, if you still owe your lender $25,000, but your auto insurance covers the cash value of your vehicle, which is $20,000, the difference between your loan amount and your insured amount is $5,000. If you are involved in a collision and file a claim, you would receive the $20,000 cash value, but you would still owe your lender the full $25,000 due on your loan.
What’s The Solution?
In order to fully protect your loan amount, or you need what is called gap insurance in addition to your standard auto insurance policy, to cover the difference between the amount determined by your policy and the amount you still owe on your loan.
There’s more to buying auto insurance than just buying standard coverage — you need the right amount of coverage for your specific situation. At Linda Dugan Insurance, we’re the Astoria, OR insurance experts. Give us a call today –we can help you choose the right policy for your unique needs.