What is GAP Insurance and is it Worth it to Buy?

GAP insurance for vehicles is a little know form of protection for car owners and leasers. It
provides protection for vehicles purchased with a car loan if the vehicle is totaled or stolen
when more is owed on the vehicle than its current worth/market value. GAP insurance pays the
difference between the depreciated value of a vehicle and what’s still owed on the loan to
purchase it.
Optional Only
GAP insurance is completely optional. Costs can range, on average, from $400 to $800 per year
when purchased from an insurance company. It can also be included in the loan to purchase the
car, but will increase the cost of monthly payments and individuals will be paying interest on
the loan amount and the GAP insurance.
Some lease companies require the coverage, while some dealerships automatically add it to the
purchase agreement. Individuals are under no obligation to purchase it and can decline the
coverage.
Depreciation
It's important for vehicle owners to understand that their brand-new car begins to depreciate in
value the moment they drive it off the dealer’s lot. With a traditional car insurance policy,
individuals are only reimbursed for the vehicle’s current valuation based on depreciation, which
is often far less than the remaining balance owed.
Repaying the Loan
Without GAP insurance, individuals will still be responsible for paying off the cost of the old car
loan, along with any new auto loan. GAP insurance covers the “gap” between what’s owed on
the vehicle and the depreciated value.
Why GAP Insurance
GAP insurance is also known as guaranteed car insurance. It can save individuals a significant
amount of money. The value of the coverage will depend on the type of vehicle that’s
purchased or leased. Individuals will also want to consider if they’re likely to drive in high-risk
environments where they feel an accident is more likely to occur.
Another benefit is that GAP insurance is typically only needed for a relatively short time, when
the disparity between the loan value is greater than the overall car value. It’s a good option for

those that lease, purchase with no money down, or have a long-term car loan of 5 years or
more.

For more information about how The Sena Group can help you with any

of your insurance needs, please contact us at 561-391-4661.

We can be found on Social Media at the following links.

The Sena Group
6501 Congress Ave., Ste. 100
Boca Raton, FL 33487