Gap auto insurance is a product which people who finance or lease a vehicle should definitely consider putting in place. It is used to bridge the gap between what the driver owes on the vehicle and its cash value and comes into play if the vehicle is stolen or totaled in an accident.
Drivers who choose to lease their vehicle may find that gap coverage is included in the leasing contract. Read through all the paperwork carefully to find out whether this is the case and how much the insurance costs. Consumers also have the option of adding this coverage to their auto insurance policy for the new car. In most cases, it is added to the policy at the time the car is bought or at the beginning of the lease, but it may be possible to add it to a policy at a later time.
Collision and comprehensive protection pay out based on the vehicle’s cash value, not its replacement cost or how much the driver paid for it. The car’s value starts to depreciate the instant it is driven off the lot. Before too long, the owner may be in a position where he or she owes more on the car than what it’s worth.
Without gap insurance coverage, a driver may be faced with having to continue making payments on a vehicle that he or she can no longer drive. This type of protection is needed to protect anyone who leases or takes out a loan to pay for a vehicle.