Getting ready to lease a vehicle? You’ll want to know about gap insurance. This type of vehicle insurance bridges the ‘gap’ between a car’s current value and the estimated cost of fulfilling a leasing contract or paying off a loan on a vehicle.
Why would you need such a policy? When you consider how quickly a new vehicle can depreciate, gap insurance can offer a significant measure of financial protection. Whether you’re leasing or financing a vehicle, depreciation can put you into the position of owing more on your loan or lease agreement on your car than it’s worth. In the event of a collision that totals your vehicle, gap coverage can help you avoid a hit to your wallet that could run into thousands of dollars.
If you’re leasing a vehicle, read your lease agreement carefully. Some dealers include gap coverage automatically. Other offer it as an optional coverage. You can also purchase gap insurance from your insurance agent. Which one is right for you? If you’re leasing a vehicle, it’s always a good idea to contact your agent, who can help you decide which is the best option for you — and your pocketbook.
