Lease or Loan Gap Coverage
Lease/loan gap coverage is designed to protect an investment on a car for which payments are still being made. Cars begin depreciating in value as soon as they are driven off the lot. If your car is stolen or wrecked in an accident, your auto insurance policy will only compensate you for the car's actual cash value. (You can check the Kelley Blue Book to determine the value of your car.)
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Is Lease/Loan Gap Insurance Right for You?
Since cars depreciate quickly with time (due to wear and tear, increased mileage, and new models being released), the gap between what your car is worth and what you still owe on your loan may be sizeable. If your car is stolen or wrecked, you must pay your deductible before your insurance company will make any payments for losses or damages. In addition, you are still responsible for paying off the remainder of your loan, and you will be without transportation.
Lease/loan gap coverage will cover the difference between the actual value of the car and the remaining balance on your loan. Lease/loan gap coverage is not required under any state law, but is a good way to protect your investment on an expensive, new financed vehicle. Lease/loan gap coverage is optional on auto insurance policies, and may not be offered by all auto insurance companies.
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**Auto Insurance Finder is not an insurance broker or carrier. Content on this site is for comparison and informational purposes only. The products and services listed on this site may not be available in all states.
Last Updated: February 14, 2008
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