Gap Insurance Protection
A new car depreciates the moment it is driven off the lot. Most new car buyers or leasers are aware of this fact, but just consider it the price of having a new vehicle. But are you aware of another possible cost of having a new auto?
Car Insurers reimburse for damages based on the market value of the vehicle at the time of the accident. So if your new car gets totaled in an accident the day or week after you buy it, the market value may have decreased by 20%. This could be $5000-$10000 or more for a high-end vehicle. You, the car buyer or leaser will still be resposible for this amount… to the dealer.
Gap insurance is a product designed to cover the “gap” between what you have contracted to pay for the vehicle. and what it is insured for. Some basic auto policies have gap insurance built in, and some do not. Find out what you are covered for before buying or leasing that new vehicle.
Some dealerships may sell gap insurance, but often at a higher rate. “Dealers typically charge $500-$700 for gap coverage that can be bought online for $300 or so.” source: USA Today
If you need a gap policy, it makes sense to investigate rates online. You can find more information HERE.