Do I Need Gap Insurance?

word of health insurance and homeowners insurance and even pet insurance what about gap insurance no it's not coverage for your moderately priced khakis and tasteful sweaters from the mall for your car more specifically for the full value of your car you may be aware that the moment you drive your car off the dealer a lot it loses roughly 10% of its value and on average your car will continue to depreciate 15 to 25 percent each year after that according to CARFAX but hey that's the cost of car ownership right if anything happens to your car before you have your loan paid off your comprehensive or collision insurance will replace your ride right not necessarily your car stolen and not recovered or crashed and declared a total loss your auto insurance carrier may not wholly make you whole instead they'll reimburse you for the actual cash value of your car which remember has been losing value since it became your car less your deductible because your car may depreciate faster than your car payments reduce your loan balance and you still may owe thousands of dollars more than that actual cash value your policy pays out gap insurance covers this difference so you can catch a ride to the dealership roll home and your brand-new replacement ride and all you'll be out is your deductible and the time it takes you to reprogram your stereo settings assurance estimates you can purchase gap insurance for a few extra bucks a month on your vehicles policy or from the dealer for five hundred to a thousand dollars now if you own your car outright gap insurance probably isn't a great investment for you feeling lucky to take your chances and go without but if you want to be on the safe side then as they say in London mind the gap