Why Gap Insurance is a Must for Leased and Financed Cars

​Although purchasing a new car is exciting, it also involves a big financial commitment, particularly if you're leasing or financing. Your auto insurance policy might provide extensive coverage, but there is one area where it might fall short—handling the "gap" between your car's actual worth and the balance you owe on it. That's where Gap Insurance comes into play. We'll look at why Gap Insurance is essential for everybody who has a leased or financed car in this article.​

​What is Gap Insurance?

If your automobile is totaled or stolen, gap insurance, also known as Guaranteed Asset Protection insurance, will typically pay the difference or a % of the amount owed  between the real cash worth of your car and the loan.

Why is Gap Insurance Necessary?

• ​Rapid Depreciation
• Cars depreciate quickly: In actuality, within the first year, the value of a new car might decrease by up to 20%. If your car is totaled or stolen during this time, there may be a sizable "gap" between what you owe and its current market value.
• Financial Protection: Without Gap Insurance, you could find yourself responsible for paying the difference between your car's depreciated value and your remaining loan balance.
• Lease Requirements: Many leasing companies require Gap Insurance to protect their investment.

Who Should Get Gap Insurance?

• ​Leaseholders: As mentioned earlier, Gap Insurance is often required when you lease a car. But even if it's not, the low upfront cost can save you from potential financial disaster.
• Long-Term Financiers: If you've financed your car for an extended period (more than 48 months), Gap Insurance is advisable.
• Down-Payment Dodgers: If you've made a small down payment (less than 20%), the gap between your loan amount and the car's value will be larger, making Gap Insurance a smart choice.

How to Purchase Gap Insurance

The dealership, your auto insurance company, or a third-party insurance provider are frequently where you can acquire gap insurance. It is wise to compare prices since they can differ.

The Cost Factor

The cost of Gap Insurance varies depending on your provider and vehicle but is generally affordable, especially when you consider the financial risk of not having it. 

Gap Insurance is a small investment that can pay off big time in the unfortunate event of a total loss, especially for those who lease or finance their cars. It ensures that you won't be forced to continue making payments on a loan for a car you can no longer use, giving you financial security and peace of mind.

Don't get caught in the 'gap.' Contact Elevated Insurance Group today to discuss adding Gap Insurance to your auto insurance policy. Secure your investment and drive with peace of mind—reach out to us now!