Mind the Gap: What is Gap Coverage?

Most people know that the minute they drive a new car, truck, or SUV away from a dealership, it automatically depreciates and is worth significantly less money than it was when it was still sitting on the lot. It only takes seconds for a new car to become a used car, but in just the same way, it can also take just a split second for a car to go from being your brand-new ride to a totaled wreck in an accident.

Because of this, it’s a good idea to think about investing in what is called gap insurance. Gap insurance might save you if you are ever involved in a wreck or have your new car stolen.

At this point, you’re probably thinking, “Won’t I be protected in the event of an accident or a theft if I have regular auto insurance?” And the answer is yes – to a degree. Auto insurance will cover the value of your vehicle, but when you first finance or lease a vehicle, it will just about always be worth less than what you still owe on it.

Let’s use an example to illustrate this point. In this hypothetical example, you’ve just financed a vehicle for $25,000, and it has lost $2,000 in depreciation after you drove it off the lot. A few days later, you are involved in an accident that leads to your new car being totaled by your insurance company. Under most traditional policies, your car insurance would likely cover you for $23,000, but that still means there’s a gap of $2,000 between the purchase price and coverage value.

Gap insurance is specifically designed to cover the difference between the value of your car and what you owe on it. While you hope to never have to deal with an accident or theft of your new car or truck, having gap insurance protection covers you from having to pay a significant amount of money out of pocket.

If you just purchased a new vehicle or you are thinking about buying one at some point in the near future, you should seriously consider looking into gap insurance coverage. The Lewis Financial Group can help you pick out the right gap insurance coverage plan and tell you more about the available options to protect you and your vehicle. Call us today at 304-242-3355 or 740-699-2636 to learn more and discuss your coverage options with a member of our team today.

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