Why Gap Insurance Is Critical For A New Car

13.08.10

GAP insurance is short for “Guaranteed Auto Protection” insurance and is critical for anyone purchasing or leasing a new model car. GAP insurance works as an extra layer of insurance coverage on top of your basic auto insurance policy. When a vehicle suffers total loss, or is considered a “write-off” by a car insurance company, standard coverage provides replacement value cost for the vehicle--also known as book value. The problem with incurring a total loss in the first couple years of ownership involves the difference between this “book value” of the car and your financial obligation to the car leasing or auto financing company. Many times when a total loss occurs you can end up owing more than you are insured for. Lets take for a example a new 2010 BMW 535i. This car starts at around $49,000, however the Kelly Blue Book value on just the base 2010 model is anywhere between $35,025 to $41,125 depending on the condition of the car.You can see the cars “book value” has depreciated by up

Source: The Car Connection (blog)

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