What is Gap Insurance and is it Worth it?
Learn about gap insurance for a new car and why you may want to consider purchasing it.
Q. When I purchased a new car recently, the dealership tried to sell me gap insurance. What exactly is gap insurance? And is it necessary?
A. Gap insurance, or Lease/Loan Gap Coverage, is protection offered by many insurance companies to people who take out car loans or leases. It fills the financial gap that can exist when your car is worth less than the amount still left on your loan or lease. Here’s how it can potentially save you thousands of dollars: Let’s say that you total your vehicle in an accident, after which an auto insurance company pays you $10,000 for the current value of your car. But there’s a problem: You still owe $15,000 on your car loan, which you are responsible for paying off. In this scenario, there is a gap of $5,000 between what your car was worth and what you still owe on it.
With Lease/Loan Gap Coverage, your insurer would pay the difference between the amount owed on your vehicle and the vehicle’s value. The coverage can apply to vehicles that are purchased or leased. Call MetLife Auto & Home for more information and to compare prices with your dealer’s quote.