Explanation and Benefits: What is Gap Insurance?
Getting the right auto insurance is an essential part of protecting both your vehicle and your investment. But what kind of insurance do you need for your new or used vehicle? Read on to learn everything you need to know about GAP insurance before you buy a car, truck, van, or SUV.
GAP insurance is a type of additional coverage you can purchase for your vehicle. It's designed to cover the difference between the current value of your vehicle and the amount you owe on your car loan or lease.
Wondering why this difference in value matters? Essentially, all vehicles become used cars the moment you drive them off the lot, even if they only have a few miles on the odometer. No matter its condition or its price, every vehicle starts to lose value immediately upon purchase.
In fact, your vehicle's value continues to depreciate for the length of time you own it. In the first year of ownership, your car or truck's value might decrease by a few hundred or a few thousand dollars, depending on the original price. GAP insurance exists to bridge the gap between your vehicle's depreciated value and the balance on your loan or lease.