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If Your Car is "Totaled", Your Insurance May Not Be Enough to Pay Off Your Loan or Lease

If you're thinking of buying or leasing a new car, you need gap insurance added to your policy to fully protect your investment.

Why is auto gap insurance so important?
Because standard comprehensive and collision auto policies only cover your new car's "fair market value". And that can be as little as 80% of what you paid for your car, starting the minute you drive it off the lot.

This means that if you're involved in an auto accident that leaves your new car "totaled", you could end up paying off a loan on a car that you can't even drive.

That's where gap insurance comes in.
Gap car insurance insures you for the difference between what you owe on your car and what your insurance company says it's worth.

And if you're leasing your car, it's very likely the leasing company will require gap insurance as well.

Gap insurance coverage would also become critical should your car be stolen. Thieves prefer new cars, and they seek out specific models, which also usually happen to be the most popular models of cars sold.

If your car is stolen, the insurance situation is the same as in the case of an at-fault accident on your part: comprehensive insurance will cover the value of the vehicle, but not necessarily the value of the loan that you owe to the bank. You could be stuck paying thousands for a car that's long gone. Add that to the truly disheartening feeling of having your car stolen, and that makes for a really rough time.

Auto gap insurance is not a coverage you'll need forever, but for the first few years of ownership, it will give you some driving security and peace of mind. And the best thing about it is that it usually costs only a few extra dollars per month.  That's far less than the dealer may charge.

Buying or leasing a brand new car is an exciting time. But don't let all the fun keep you from the serious business of gap insurance protection.