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Question I bought a car last weekend. I used my home equity to pay for the vehicle, so I gave the dealer a cashiers check to buy the car. I also bought gap insurance. Although I did not finance the car using an auto loan, do I still need gap insurance and how does it work if I used equity cash to buy the car?

Answer

You should check with the insurance company to determine if the GAP policy you bought will pay you instead of the bank. Typically, GAP insurance will pay the bank the difference between the actual cash value of the vehicle and the current outstanding balance on your loan or lease. If it will not pay you this difference and will only pay the bank then you should consider canceling the policy.

You can shop for a new insurance policy by getting an automobile insurance quote here.

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