Gap Insurance

When you purchase or lease a new vehicle, the value starts depreciating the very minute it {the vehicle} leaves the car park. Suffice us to say that as a matter of fact, most vehicles lose about 20% of the value attached to it within a year.

Standard auto insurance policies act as a coverage for the depreciated value, because insurance will pay the current market value for the car.

If you pay for the purchase of a new vehicle and only put down a little deposit, the amount of the loan borrowed  may very well surpass the market value of the vehicle as at when it was purchased.

Gap Insurance therefore bridges the gap between the worth of a vehicle and what you owe on it.

Therefore, it is a good idea for you to consider buying gap insurance for your new vehicle if you:

• Deposited a percentage of less than 20
• Financed for 5years or longer
• Leased the vehicle
• Purchased a car or truck whose depreciation is faster than average
• Allowed an adverse equity from an old car loan roll over into the new one

 Although the car dealer might offer to sell you a gap insurance on your new car or truck, most car insurers offer it and for a lesser cost.
On most auto insurance policies including gap insurance with collision and comprehensive coverage makes an addition of only about $20 a year to the annual premium.