One common problem that individuals run into after a vehicle accident is that the cost to repair the vehicle rises above what the vehicle is actually worth. This is usually more of a problem with newer vehicles, mainly because they depreciate so quickly after purchase. In most cases, individuals who purchase or lease a new vehicle are required to carry GAP insurance. This type of insurance is not required under Kentucky law, but the loan holder may indeed require it for a driver.
GAP insurance is important when a vehicle is considered to be “underwater,” meaning an individual owes more on their vehicle than what the vehicle is actually worth. Let us examine a theoretical scenario to see how this type of insurance helps. Let us suppose an individual purchases a new Ford F-150 for $70,000. However, let us suppose this person still owes $65,000 on the vehicle when they are involved in a vehicle accident covered by the insurance.