What is "gap" protection and why is it so important?
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Standard comprehensive and collision auto policies only cover your new car's "fair market value". This means that if you're involved in an auto accident that leaves your new car "totalled", (we all hope this never happens,) you could end up paying off a loan on a car that you can't even drive. A gap car insurance policy 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 (knock on wood) be stolen. Thieves prefer new cars (who doesn't), 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 policy 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 doesn't cost much. |