Does your vehicle have GAP?

You've got your auto lease deal all set when it hits you: "What happens if this car gets into an accident?"

Technically, the car still belongs to the manufacturer or leasing company. But, you're still responsible for replacing it. That's right. Even after your auto insurance company figures out how much the car is worth and pays off the damage, you may still owe the carmaker some dough. And that's where gap insurance comes in.
Though it may sound trivial, gap insurance is a must for leasing. And if you made a small down payment when buying a car, a gap policy can be a lifesaver as well. But first, let's look at why it exists.

As the name implies, gap insurance covers what traditional car insurance doesn't. In other words, it closes the gap between what your auto insurance company pays if your car is stolen or totaled and what you owe the finance company.

Let's take a test case. Say you bought your car two months ago for $25,000. You begin making car payments at about $500 a month based on a 6-percent interest rate. Then, disaster strikes: a tree falls on your car and flattens it.

You call the auto insurance company and the adjustor looks into his crystal ball and decides at the time of the accident your car was worth only $20,000. The car may only be a couple of months old, but it has already lost 20 percent of its value. Unfortunately, the finance company still wants the full amount you owe them. With interest, tax and license fees, they figure that to be $27,000.

Yikes! There's a gap of $7,000 between the $20,000 that the insurance company is willing to pay you and the $27,000 the finance company is demanding. Most folks are going to be eating Spam dinners for the next two years, but if you have gap insurance you can safely order steak.

Apply the same scenario to someone who bought their car. If they left the dealer lot without putting several thousand dollars down, they likely owe more than the auto insurance company will pay if the vehicle gets totaled or stolen in the first few years. Once again, gap coverage can save the day.

And that's why gap insurance is a must for many drivers. In fact, gap insurance is usually mandated by lease contracts or included within them. If a gap policy is required but not included in your contract, you should shop around for this coverage (car insurance companies sell it). If gap coverage is included in the car lease, check to see how much is offered and how much you're going to be paying for it. (In some cases, lease contracts may include what is known as a gap waiver, which protects you from gap charges in the event that the leased vehicle is declared a total loss — eliminating the need for a gap policy.)

Is gap insurance necessary for people who finance their cars? Well, it depends on your coverage. If your regular auto insurance policy is written to pay off the fully financed amount, then you don't need gap insurance.

A few things to keep in mind when buying gap insurance:

• Although most people purchase it when a lease is initiated, some car insurance companies will sell you a gap policy anytime during the lease term.
• You must be in compliance with all terms of the lease.
• Your gap insurance policy may not be honored if you don't have collision and comprehensive insurance coverage. Further, lease contracts generally require that you carry collision and comprehensive at all times.

If your car is totaled or stolen, carefully follow all requirements made by your auto insurance company. For example, some companies require you to continue making car payments on your totaled vehicle until the money from the gap insurance is paid out.

So when initiating a car loan or lease, always remember to ask your insurance agent or loan officer about gap insurance. If you have an accident, you'll be glad you planned ahead.

Five tips to keep your tires in good shape

“Ten years ago, NHTSA and AAA helped Rubber Manufacturers Association (RMA) launch National Tire Safety Week,” said Charles Cannon, RMA president and CEO. “Our partnership and efforts continue today because our job is not finished. Too many drivers fail to do one simple task every month that will reduce their safety risk and help our nation conserve valuable natural resources. Checking tire pressure takes just five minutes, and it's worth every second.”

There is a lot to be learned about tire safety. An RMA survey shows that 85 percent of motorists don't know how to properly inflate their tires, and only 20 percent of drivers check their tire pressure each month.

AAA anticipates that it will assist 1.2 million stranded motorists with tire-related issues this summer, many of which could be avoided. Follow our tire-safety checklist to make sure AAA doesn't have to come to your rescue.

1. Check tire pressure. Do this at least once a month and before and after any long trips. Automakers often suggest a cold tire pressure in the neighborhood of 30 psi, but you should check your owner's manual to see what your car needs. Be sure to use the automaker's recommended pressure and not the maximum pressure indicated on the tires. That number represents the absolute max psi a given tire can hold, not what it should be rolling on day in and day out.

According to Goodyear, a tire that is underinflated doesn't roll as easily and the increased rolling resistance requires more energy, robbing the vehicle of fuel efficiency. Optimal inflation can improve fuel economy by 3.3 percent, according to the U.S. Department of Energy.

Keep a gauge in your glovebox, and visit your neighborhood gas station to get air if your pressure is too low.

2. Rotate your tires. Michelin says this should be done every 6,000 to 8,000 miles. Every tire will wear differently. On front-wheel-drive cars, the front wheels wear at almost twice the rate of the rear wheels. Some specialists say that in left-hand-drive countries, the left tire may wear faster than the right, so keep an eye out for that. Regularly rotating tires helps achieve more uniform wear, which means consistent performance and longer tire life. Have your tires rotated at a shop for about $15 or buy a hydraulic floor jack and do it yourself.

3. Examine your treads. The old wisdom was that tires should have at least 2/32 inch of tread depth, and laws agree. But new information from Tirerack.com shows that greater depth is preferred. In their tests, a new tire with 10/32 inch of depth took 195.2 feet to stop in the rain, while tires with 4/32 inch took 290 feet and tires with 2/32 inch depth took 378.8 feet to stop.

To make sure your tires have a tread depth of at least 4/32 inch, stick a quarter, Washington's head facing down, into one of the tire-tread grooves. If any part of Washington's head is obscured, you have at least that amount of tread. Prefer to stick with the legal 2/32-inch tread depth? Perform the same check, but use a penny and, of course, Lincoln's head.

4. Align your wheels. Improperly aligned wheels can create rapid and uneven wear, says the Rubber Manufacturers Association. Misaligned wheels can also create steering and tracking problems. Take you car to a service station for alignment and the technicians will adjust the steering and suspension components to manufacturer specifications, making sure that the wheels are perpendicular to the ground and parallel to each other. According to Midas, a basic four-wheel alignment on an average sedan will cost about $80.

5. Keep the deepest treads in the rear. Though this may seem counterintuitive, since the front tires do the braking and steering, if you have two newer tires and two older tires, keep the newer rubber on the rear wheels. Deeper treads grip the road and channel water better, making the rear of the car less likely to hydroplane and fishtail. The result is that, while your shabby front tires may result in understeer, it's easier for a driver to correct from such a condition than from oversteer resulting from worn rear tires.

Read more: http://www.autoweek.com/article/20110608/CARNEWS/110609872#ixzz1PBgGYYQg