By Madeline Klein on January 22, 2020 in Insurance Basics
We aren’t your average car insurance company that throws around confusing mumbo jumbo, never truly explaining what it means to their customers. With transparent, clear, and simple as our core values, you can rest assured we want to keep things easy to understand. That’s why we dive into everything you’ve ever wanted to know about the term “gap insurance” below!
How Does Gap Insurance Work?
Gap insurance seems confusing at a high level, but let’s break it down! Everyone’s heard the warning; “The second you drive your new car off the lot, it depreciates in value.” Although we all wish it was, this isn’t a myth. According to CarFax’s research, you can lose more than 10 percent of your car’s value within the first month of driving it off the lot. By your first year, the value can drop more than 20 percent. While this might seem like a terrifying weight on your shoulders, there’s a coverage option for this specific situation, so you don’t have to worry!
Gap insurance financially protects customers who buy new cars, leased vehicles, or purchases with little or no down payment so you can buckle up and enjoy that new car smell.
What Does Gap Insurance Cover?
Gap insurance covers the difference between the amount owed on the car and its actual cash value, so if you were to get in an accident where your new or leased car is totaled – you wouldn’t just receive the value of the car at that current moment. This is big news because as we mentioned earlier, within the first month your car’s value could’ve already dropped 10 percent!
In lieu of gap insurance, Say offers New Car Replacement coverage for customers in a similar situation. If you qualify for the coverage, you won’t have to settle for the depreciated value of your car – you’ll get the money you need to purchase a new, similarly equipped vehicle!
Is Gap Insurance Worth It?
Some leasing or financing agreements require car owners to purchase gap insurance. Occasionally, you are obligated to buy, but in other situations you have options! No matter the situation, gap insurance is worth it if it gives you the peace of mind to spend money on your dream car.
How Much is Gap Insurance?
The average annual cost of gap insurance is $36-80 through auto insurance companies according to carinsurance.com. A lender policy, which you purchase through your lender, can be up to $700 per year – typically rolled up into your monthly payments. This price can vary based on numerous factors.
If you’re curious on prices, our best advice is to request a quote!
Moral of the story, there are options to cover your new car from accidents and depreciation at the same time! Gap insurance may be required or purely provide additional peace of mind for new car owners in tough situations, it’s always important to know your options!
Check out our car insurance coverage section to learn more about Say’s coverage options.